mheducation.com Homework Help Way Cool produces two difterent models of air cond
ID: 2394548 • Letter: M
Question
mheducation.com Homework Help Way Cool produces two difterent models of air condtioners. 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. 470,000 Number of batches Machining 8,140 233 000Number of setups $1,013,000 Finiahiag toldie 12,000 Helding hours 5,600 Inspecting Revork Nunber of inspections 228,000 481,000 35.500 234,500 1.000Revork orders Support Purchasing Providing space Providing utiiities Nurber of units ber ot units 4,490 -490 Additional production information conceming its two product lines follows Units produced Welding hours ,090 ,000 415 Number ot inspections ine hourS 850 130 153 Purchase orders Required: 1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overbead 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. Deter and $190 for Model 212 3. mine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $260 for Model 145 If the market price for Model 145 is $2.075 and the market price for Model 212 is $330, determine the profit or loss per unit for each MacBook Ai
Explanation / Answer
Part 1)
Calculation of Departmental Overhead Rate
Components Department
Changeover
$ 470,000.00
machining
$ 310,000.00
Setups
$ 233,000.00
(A) Total Overheads in Components Department
$ 1,013,000.00
(B) Hours
8140
(A/B) Overhead Rate ( Overhead cost/Machine Hours)
$ 124.45
Finishing Department
Welding
$ 192,000.00
Inspecting
$ 228,000.00
Rework
$ 61,000.00
(A) Total Overheads in Finishing Department
$ 481,000.00
(B) Total Welding Hours
5600
(A/B) Overhead Rate ( Overhead cost/Welding Hours)
$ 85.89
Support Department
Purchasing
$ 137,000.00
Providing Space
$ 35,000.00
Providing utilities
$ 62,000.00
(A) Total Overheads in Support Department
$ 234,000.00
(B) Total Number of Purchase Orders
459
(A/B) Overhead Rate ( Overhead cost/Purchase orders)
$ 509.80
Model 145
Activity Driver
Departmental Overhead Rate
Total Overhead Cost
Components
$ 2,850.00
$ 124.45
$ 354,674.45
Finishing
$ 1,600.00
$ 85.89
$ 137,428.57
Support
$ 306.00
$ 509.80
$ 156,000.00
Total Overhead Cost Assigned
$ 648,103.02
Units Produced
1400
Overhead Per Unit
$ 462.93
Model 212
Activity Driver
Departmental Overhead Rate
Total Overhead Cost
Components
$ 5,290.00
$ 124.45
$ 658,325.55
Finishing
$ 4,000.00
$ 85.89
$ 343,571.43
Support
$ 153.00
$ 509.80
$ 78,000.00
Total Overhead Cost Assigned
$ 1,079,896.98
Units Produced
3090
Overhead Per Unit
$ 349.48
Part 2) Statement of Total Cost Per Unit
Details
Model 145
Model 212
Direct Labor and Direct Material Per Unit
$ 260.00
$ 190.00
Overhead Cost per Unit
$ 462.93
$ 349.48
Total Cost Per Unit
$ 722.93
$ 539.48
Part 3) Statement of Profit (loss) per Unit
Details
Model 145
Model 212
Market Price Per Unit
$ 2,075.00
$ 330.00
Cost Per Unit
$ 722.93
$ 539.48
Profit (loss) Per unit
$ 1,352.07
$ -209.48
Note – Model 212 have a loss of $209.48 per unit.
Part 1)
Calculation of Departmental Overhead Rate
Components Department
Changeover
$ 470,000.00
machining
$ 310,000.00
Setups
$ 233,000.00
(A) Total Overheads in Components Department
$ 1,013,000.00
(B) Hours
8140
(A/B) Overhead Rate ( Overhead cost/Machine Hours)
$ 124.45
Finishing Department
Welding
$ 192,000.00
Inspecting
$ 228,000.00
Rework
$ 61,000.00
(A) Total Overheads in Finishing Department
$ 481,000.00
(B) Total Welding Hours
5600
(A/B) Overhead Rate ( Overhead cost/Welding Hours)
$ 85.89
Support Department
Purchasing
$ 137,000.00
Providing Space
$ 35,000.00
Providing utilities
$ 62,000.00
(A) Total Overheads in Support Department
$ 234,000.00
(B) Total Number of Purchase Orders
459
(A/B) Overhead Rate ( Overhead cost/Purchase orders)
$ 509.80
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