Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.

ProcessActivityOverhead CostDriverQuantityComponentsChangeover$450,450Number of batches770Machining388,690Machine hours8,270Setups37,300Number of setups20$876,440FinishingWelding$390,600Welding hours6,000Inspecting313,775Number of inspections815Rework71,550Rework orders270$775,925SupportPurchasing$175,725Purchase orders495Providing space31,900Number of units8,100Providing utilities117,140Number of units8,100$324,765

Additional production information concerning its two product lines follows.

Model 145Model 212Units produced2,7005,400Welding hours2,2003,800Batches385385Number of inspections505310Machine hours2,9505,320Setups1010Rework orders140130Purchase orders330165

Required:

1.Using ABC, compute the overhead cost per unit for each product line.

2.Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $210 for Model 145 and $116 for Model 212.

3.If the market price for Model 145 is $552.78 and the market price for Model 212 is $311.38, determine the profit or loss per unit for each model.