Required:1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line.Overhead costsO per machine hourMachine hours2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $240 for Model 145 and$140 for Model 212.Overhead AssignedActivity DriverPlantwide OH rateTotal Overhead CostUnits ProducedOH Cost per unitModel 145Model 2122$Model 145Model 2123. If the market price for Model 145 is $745 and the market price for Model 212 is $450, determine the profit or loss per unit for each model.Model 145Model 212Market price Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its componentsdepartment. The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, anddrivers associated with these two manufacturing processes and the production support process follow. (Loss amounts should beindicated with a minus sign. Round your intermediate calculations and round "Cost per unit and OH rate" answers to 2 decimalplaces.)ActivityChangeoverMachiningProcessOverhead CostDriverQuantity$ 453,500302,000229,500ComponentsNumber of batches870Machine hours7,640SetupsNumber of setups220$ 985,000$ 181,100227,000Welding hoursNumber of inspectionsFinishingWeldingInspecting4,800790Rework60,250Rework orders200PurchasingProviding spaceProviding utilities$ 468,350$ 137,00030,55060,300SupportPurchase orders458Number of units5,4005,400Number of units$ 227,850Additional production information concerning its two product lines follows.Model 145Model 212Units producedWelding hours1,8001,6003,6003, 200435Batches435Number of inspectionsMachine hours4603302,2905,350Setups110110Rework orders14060Purchase orders305153

Solution:-1 Calculation of overhead rate based on machine hours as follows:-

equired: 1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. Overhead costs O per machine hour Machine hours 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $240 for Model 145 and $140 for Model 212. Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Model 145 Model 212 2$ Model 145 Model 212 3. If the market price for Model 145 is $745 and the market price for Model 212 is $450, determine the profit or loss per unit for each model. Model 145 Model 212 Market price

equired: 1. Using a plantwide overhead rate based on machine hours, compute the overhead cost per unit for each product line. Overhead costs O per machine hour Machine hours 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $240 for Model 145 and $140 for Model 212. Overhead Assigned Activity Driver Plantwide OH rate Total Overhead Cost Units Produced OH Cost per unit Model 145 Model 212 2$ Model 145 Model 212 3. If the market price for Model 145 is $745 and the market price for Model 212 is $450, determine the profit or loss per unit for each model. Model 145 Model 212 Market price

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 5CE: Roberts Company produces two weed eaters: basic and advanced. The company has four activities:...

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