Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 $ 472,000 309,000 234,000 $1,015,000 Number of batches Machine hours Number of setups 870 7,850 80 Machining Setups Finishing Welding $ 194,000 Wlding hours Inspecting Rework 6,800 870 170 229,000 63,000 $ 486,000 $ 141,000 37,000 63,000 Number of inspections Rework orders Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 549 4,820 4,820 Support $ 241,000 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 1,800 2,600 435 500 2,550 40 110 366 3,020 4,200 435 370 5,300 40 60 183 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 $220 for Model 145 and 110 for Model 212 3. If the market price for Model 145 is $1,100 and the market price for Model 212 is $310, determine the profit or loss per unit for each model
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started