uces company ay systems in their components department. The mechanical systems a
ID: 2538054 • Letter: U
Question
uces company ay 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. tionerS Activity Process Components Changeover Overhead Cost Driver 830 8,300 20 5 460,000 Number of batches Machining Setups 10.000 Machine hours 227,000 Number of setups 5 997.000 Finishing Inspecting Welding 190,000 Welding hours 229,000 Number of inspections 5,200 780 Rework 4,500 Rework orders 5 483,500 489 5,140 5,140 Support Purchasing Providing space Providing utilities 5 139,000 Purchsse orders 31,500 Number of units 3.000 Number of units 233,500 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 2.100 1,200 415 480 2,950 10 170 328 3,040 4.000 415 320 5,350 10 163Explanation / Answer
Way Cool
Components Department
Machine hours
8,300 hours
Overhead cost
$997,000
Cost per machine hour
$12.01
Finishing Department
welding hours
5,200
Overhead cost
$483,500
cost per welding hour
$92.98
Support Department
Purchase orders
489
Overhead cost
$233,500
Cost per purchase order
$477.50
Computation of overhead cost per unit:
Model 145
Activity Driver
Departmental OH Rate
Total overhead cost
Components
2,950 machine hours
$120.12
$354,355
Finishing
1,200 welding hours
$92.98
$111,576
Support
326 purchase orders
$477.50
$155,665
Total overhead assigned
$621,596
Number of units
2,100
overhead cost per unit
$296
Model 212
Activity Driver
Departmental OH Rate
Total overhead cost
Components
5,350 machine hours
$120.12
$642,642
Finishing
4,000 welding hours
$92.98
$371,920
Support
163 purchase orders
$477.50
$77,833
Total overhead assigned
$1,092,395
Number of units
3,040
overhead cost per unit
$359.34
Model 145
Model 212
Direct labor and direct material cost
$290
$150
Overhead per unit
$296
$359.34
total cost per unit
$586
$509.34
Model 145
Model 212
Market Price
$1,925
$320
Total cost per unit
$586
$509.34
Profit/(loss)
$1,339
($189.34)
Components Department
Machine hours
8,300 hours
Overhead cost
$997,000
Cost per machine hour
$12.01
Finishing Department
welding hours
5,200
Overhead cost
$483,500
cost per welding hour
$92.98
Support Department
Purchase orders
489
Overhead cost
$233,500
Cost per purchase order
$477.50
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