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		$	480,000		Number of batches	890
	Machining			312,000		Machine hours	7,890
	Setups			230,000		Number of setups	160
			$	1,022,000
Finishing	Welding		$	184,000		Welding hours	5,400
	Inspecting			228,000		Number of inspections	830
	Rework			63,000		Rework orders	170
			$	475,000
Support	Purchasing		$	135,000		Purchase orders	519
	Providing space			30,500		Number of units	4,720
	Providing utilities			62,000		Number of units	4,720
			$	227,500

Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,700			3,020
Welding hours		1,800			3,600
Batches		445			445
Number of inspections		460			370
Machine hours		2,550			5,340
Setups		80			80
Rework orders		70			100
Purchase orders		346			173

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 $1,475 and the market price for Model 212 is $300, determine the profit or loss per unit for each model.

Model 145 Activity Driver 2,550 Departmental OH Rate Total Overhead Cost $ 0 Components Finishing Support 1,800 $ 0 346 0 1,700 Overhead cost per unit Model 212 Activity Driver 5,340 Departmental OH Rate Total Overhead Cost $ 0 Components Finishing Support $ $ 0 3,600 173 0 3,020 Overhead cost per unit Model 145 Model 212 Materials and Labor per unit Overhead cost per unit Total cost per unit Model 145 Model 212 Market price per unit Cost per unit Profit (loss) per unit