Answer:
1. Plantwide Overhead Rate $ 220.06 per machine hour
Total Cost per Unit= Model 145 $ 555.96 per unit
Total cost per unit = Model 212 $ 616.94 per unit
Profit (loss) Model 145 219.04
Loss Model 212 (26.94)
Explanation:
Real Cool
<u>Process Activity Overhead Cost Driver Quantity</u>
<u><em>Components </em></u>
Changeover $452,000 Number of batches 750
Machining 300,200 Machine hours 7,640
<u>Setups 229,000 Number of setups 40</u>
$981,200
<u><em>Finishing</em></u>
Welding $180,100 Welding hours 3,600
Inspecting 231,000 Number of inspections 850
<u>Rework 81,250 Rework orders 210</u>
$472,350
<u><em>Support </em></u>
Purchasing $136,500 Purchase orders 480
Providing space 30,300 Number of units 4,500
<u>Providing utilities 50,910 Number of units 4,500</u>
$227,710
Additional production information concerning its two product lines follows.
Model 145 Model 212
Units produced 1,500 3,000
Welding hours 1,400 2,200
Batches 375 375
Number of inspections 610 340
Machine hours 2,290 6,350
Setups 20 20
Rework orders 80 130
Purchase orders 320 160
We find the plantwide overhead rate by dividing the total overhead with the total machine hours.
1. Plantwide Overhead Rate= Total Factory Overhead/ Total Machine Hours
Plantwide Overhead Rate= $981,200+ $472,350+$227,710/7640
= 1681260/7640= $ 220.06 per machine hour
We multiply the machine hours of each model to get the overhead .
2. Cost of Model 145
Materials and Labor = $220 *1500= $330,000
Overhead = $220.06 *2290= $503,937.4
Total Cost = $83,3937.4
Total Cost per Unit= $83,3937.4/1500= $ 555.96 per unit
Cost Of Model 212
Materials and Labor = $150 *3000= $ 450,000
Overhead = $220.06 *6350= $ 1400,810
Total Cost = $ 1850810
Total cost per unit = $ 1850810/ 3000= $ 616.94 per unit
We find the profit or loss by subtracting the mfg cost from the market value.
3. Model 145 Model 212
Market Price $775 $590
<u>Manufacturing Cost ($555.96) ($616.94)</u>
<u>Profit (loss) 219.04 (26.94)</u>
