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. Process Activity Overhead Cost Driver Quantity Components Changeover $ 468,000 Number of batches 790 Machining 312,000 Machine hours 7,790 Setups 230,000 Number of setups 180 $ 1,010,000 Finishing Welding $ 194,000 Welding hours 5,900 Inspecting 221,000 Number of inspections 830 Rework 63,500 Rework orders 190 $ 478,500 Support Purchasing $ 139,000 Purchase orders 471 Providing space 33,000 Number of units 4,920 Providing utilities 63,000 Number of units 4,920 $ 235,000 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced 1,900 3,020 Welding hours 2,200 3,700 Batches 395 395 Number of inspections 520 310 Machine hours 2,450 5,340 Setups 90 90 Rework orders 100 90 Purchase orders 314 157

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 $190 for Model 145 and $110 for Model 212. 3. If the market price for Model 145 is $875 and the market price for Model 212 is $290, determine the profit or loss per unit for each model.