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Exercise 17-9 Using ABC to assess prices LO P3

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		$	510,450		Number of batches	830
	Machining			362,208		Machine hours	7,840
	Setups			289,600		Number of setups	160
			$	1,162,258
Finishing	Welding		$	362,320		Welding hours	5,600
	Inspecting			301,125		Number of inspections	825
	Rework			35,700		Rework orders	170
			$	699,145
Support	Purchasing		$	202,680		Purchase orders	563
	Providing space			30,700		Number of units	8,400
	Providing utilities			127,220		Number of units	8,400
			$	360,600

Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		2,800			5,600
Welding hours		1,800			3,800
Batches		415			415
Number of inspections		475			350
Machine hours		2,550			5,290
Setups		80			80
Rework orders		90			80
Purchase orders		375			188

Required: 1. Using ABC, compute the overhead cost per unit for each product line. 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $210 for Model 145 and $114 for Model 212. 3. If the market price for Model 145 is $572.73 and the market price for Model 212 is $330.02, determine the profit or loss per unit for each model.

Required 2:

Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $210 for Model 145 and $114 for Model 212. (Round your final answers to 2 decimal places.)

	Model 145 Model 212 Materials and Labor per unit Overhead cost per unit Total cost per unit

Required 3: If the market price for Model 145 is $572.73 and the market price for Model 212 is $330.02, determine the profit or loss per unit for each model. (Round your final answers to 2 decimal places.)

	Model 145 Model 212 Price per unit Cost per unit Profit (loss) per unit

Chapter 17 Exercises Help Save & Exit Submit Check my work Exercise 17-9 Using ABC to assess prices LO P3 points 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 eBook Process Activity Components Changeover Machining Setups Driver Number of batches Machine hours Number of setups Quantity 930 7.800 Hint 160 Print References Finishing Welding Inspeeting Rework Overhead cont $ 510, 450 362,208 289,600 $1,162,258 $ 362.320 301. 125 35,700 699, 145 $ 202,580 30,700 127,220 360, 600 Welding hours Number of inspections Rework Orders 5,600 825 170 563 Support Purchasing Providing space Providing utilities Purchase orders Number of units Number of units 8,000 8.400 Additional production information concerning its two product lines follows. Model 212 5.600 3.800 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders Model 145 2.800 1,800 415 475 2,550 5.290 80 80 375 Required: 1. Using ABC, compute the overhead cost per unit for each product line. 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $210 for Model 145 and $114 for Model 212. 3. If the market price for Model 145 is $572.73 and the market price for Model 212 is $330.02, determine the profit or loss per unit for each model Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimals places.) Model 145 Activity driver Overhead incurred assigned Activity Expected Costs Expected Activity Activity Rate 510,450 362,208 289 600 830 Number of batches 7,840 Machine hours 160 Setups Components Changeover Machining Setups Finishing Welding Inspecting Rework Support Purchasing Providing space and utilities 362,320 301,125 35,700 5,600 Welding hours 825 Inspections 170 Rework orders 202,680 157,920 563 Purchase orders 8,400 Units Total overhead cost Total units produced Overhead cost per unit Renee Required 2 >

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