Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components dep

Question

3 years ago

11

Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components dep

artment. 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. (Round OH rate and cost per unit answers to 2 decimal places.)
Process Activity Overhead Cost Driver Quantity
Compnents Changeover $452,000 Number of batches 750
Machining 300,200 Machine hours 7,640
Setups 229,000 Number of setups 40
$981,200
Finishing Welding $180,100 Welding hours 3,600
Inspecting 231,000 Number of inspextions 850
Rework 81,250 Rework orders 210
$472,350
Support Purchasing $136,500 PUrchase orders 480
Providing space 30,300 Number of units 4,500
Providing utilities 50,910 Number of units 4,500
$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
Required:
1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line.
2. Determine the total cost per unit for each products line if the direct labor and direct materials costs per unit are $220 for Model 145 and $150 for Model 212.
3. Assume if the market price for Model 145 is $755 and the market price for Model 212 is $590, determine the profit or loss per unit for each model.

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