Question
Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are combined with
Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their 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.
Process | Activity | Overhead Cost | Driver | Quantity | ||||
Components | Changeover | $ | 476,000 | Number of batches | 750 | |||
Machining | 314,000 | Machine hours | 8,210 | |||||
Setups | 231,000 | Number of setups | 140 | |||||
$ | 1,021,000 | |||||||
Finishing | Welding | $ | 184,000 | Welding hours | 5,500 | |||
Inspecting | 229,000 | Number of inspections | 895 | |||||
Rework | 63,000 | Rework orders | 250 | |||||
$ | 476,000 | |||||||
Support | Purchasing | $ | 137,000 | Purchase orders | 531 | |||
Providing space | 33,000 | Number of units | 5,210 | |||||
Providing utilities | 66,000 | Number of units | 5,210 | |||||
$ | 236,000 | |||||||
Additional production information concerning its two product lines follows.
Model 145 | Model 212 | |||||
Units produced | 2,100 | 3,110 | ||||
Welding hours | 2,200 | 3,300 | ||||
Batches | 375 | 375 | ||||
Number of inspections | 505 | 390 | ||||
Machine hours | 2,850 | 5,360 | ||||
Setups | 70 | 70 | ||||
Rework orders | 130 | 120 | ||||
Purchase orders | 354 | 177 | ||||
Required: 1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $230 for Model 145 and $130 for Model 212. 3. If the market price for Model 145 is $1,700 and the market price for Model 212 is $280, determine the profit or loss per unit for each model.
1.Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. (Round your intermediate calculations and per unit cost answers to 2 decimal places.)
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2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $230 for Model 145 and $130 for Model 212. (Round your intermediate calculations and cost per unit answers to 2 decimal places.)
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3.
If the market price for Model 145 is $1,700 and the market price for Model 212 is $280, determine the profit or loss per unit for each model. (Loss amounts should be indicated with a minus sign. Round your intermediate calculations and final answers to 2 decimal places.)
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