Way Cool produces two different models of air conditioners. The company produces

Question

Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department. The mechanical systems are drivers associated with these two manufacturing processes and the production support process follow combined with the housing assembly in its finishing department. The activities, costs, and Overhead cost Driver Quantity Machining Setups 543,750 Number of batches 398,368 Machine hours 220,200 Number of setups 750 8, 440 120 $1,162,318 s 220,880 Welding hours ,400 835 210 Pinishing Welding 317,300Number of inspections Inspecting Rework Rework orders 52,500 $ 590,680 85 Purchase orders 30,900 Number of unitis 533 7,500 7,500 SupportPurchasing 8 183,8 Providing space utilitien 324,135 Additional production information concerning its two product lines follows. Model 145 Model 212 Units produced Welding hours Batcher Nunber of inspections Hachine hours Setups Revork orders Purchase orders 2,500 1,400 375 465 ,150 60 140 355 , 000 3,000 375 370 s, 290 60 70 178

Explanation / Answer

STATEMENT SHOWING ACTIVITY RATE OF ACTIVITY POOL Activity Total Expected Activity Model 145 Model 212 ACTIVITY COST POOL Measures Overheads Activity Rate Activity Incurred OH cost Activity Incurred OH cost Components: Changeovr Batches 543,750 750 725 375 271875 375 271875 Machining MH. 398,368 8,440 47 3150 148680 5290 249688 Setups Setups 220,200 120 1,835 60 110100 60 110100 Finishing: Welding Welding hrs 220,880 4,400 50 1400 70280 3000 150600 Inspeccting Inspections 317,300 835 380 465 176700 370 140600 Rework Rework order 52,500 210 250 140 35000 70 17500 Support: Purchasing Orders 183,885 533 345 355 122475 178 61410 Providing space Units 30,900 7,500 4 2500 10300 5000 20600 Providing Utilities Units 109,350 7,500 15 2500 36450 5000 72900 Total OH 981860 1095273 Total Units produced 2500 5000 OH cost per unit 392.744 219.0546 Req 2: Model 145 Model 212 Material and Labour cost 240 121 OH cost per unt 392.74 219.05 Cost per unit 632.74 340.05 Req 3; Model 145 Nodel 212 Selling price per unit 633.34 340.44 Cost per unit 632.74 340.05 Pprofit (Loss) per unit 0.6 0.39

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