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 Overhead Cost Driver Quantity Components Changeover $ 474,000 Number of batches 820 Machining 313,000 Machine hours 3.100 Setups 226.000 Number of setups 180 $1,013,000 Finishing Welding $190.000 Welding hours Inspecting 223,000 Number of Inspections Rework 1,500 Rework orders 220 $ 474.500 Support Purchasing Purchase orders Providing space 18.000 umber of units 5,020 Providing utilities 61,000 Number of units 5.920 810 49 Additional production information concerning its two product lines follows, Units produced Welding hours Model 145 2.000 2,000 435 500 2.850 Model 212 3.020 3.900 435 sta 5,310 her of inspections Machine hours work order Purchase orders 164 326 00 163 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 director and direct materials costs per unit are $300 for Model 145 and $120 for Model 212 3. If the market price for Model 145 is $1,625 and the market price for Model 212 $260. determine the profit or loss per unit for each model 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 Overhead Cost Driver Quantity Components Changeover $ 474,000 Number of batches 820 Machining 313,000 Machine hours 3.100 Setups 226.000 Number of setups 180 $1,013,000 Finishing Welding $190.000 Welding hours Inspecting 223,000 Number of Inspections Rework 1,500 Rework orders 220 $ 474.500 Support Purchasing Purchase orders Providing space 18.000 umber of units 5,020 Providing utilities 61,000 Number of units 5.920 810 49 Additional production information concerning its two product lines follows, Units produced Welding hours Model 145 2.000 2,000 435 500 2.850 Model 212 3.020 3.900 435 sta 5,310 her of inspections Machine hours work order Purchase orders 164 326 00 163 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 director and direct materials costs per unit are $300 for Model 145 and $120 for Model 212 3. If the market price for Model 145 is $1,625 and the market price for Model 212 $260. determine the profit or loss per unit for each model
