Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its 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 Components Changeover Machining Setups Finishing Welding Support Inspecting Rework Purchasing Providing space Providing utilities Overhead Cost $ 559,650 411,510 74,000 $1,045, 160 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders $ 288,640 257,600 55,000 $ 601,248 $ 194,540 30,800 37,968 $ 263,300 Model 145 1,200 1,200 455 475 Driver Number of batches Machine hours Number of setups Additional production Information concerning its two product lines follows. 3,350 28 158 365 Welding hours Number of inspections Rework orders Purchase orders Number of units Number of units Model 212 2,400 3,200 455 330 5,350 20 100 183 Quantity 910 8,780 40 4,400 885 250 548 3,600 3,600 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 $250 for Model 145 and $112 for Model 212. 3. If the market price for Model 145 is $993.57 and the market price for Model 212 is $536.62, determine the profit or loss per unit for each model.
Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its 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 Components Changeover Machining Setups Finishing Welding Support Inspecting Rework Purchasing Providing space Providing utilities Overhead Cost $ 559,650 411,510 74,000 $1,045, 160 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders $ 288,640 257,600 55,000 $ 601,248 $ 194,540 30,800 37,968 $ 263,300 Model 145 1,200 1,200 455 475 Driver Number of batches Machine hours Number of setups Additional production Information concerning its two product lines follows. 3,350 28 158 365 Welding hours Number of inspections Rework orders Purchase orders Number of units Number of units Model 212 2,400 3,200 455 330 5,350 20 100 183 Quantity 910 8,780 40 4,400 885 250 548 3,600 3,600 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 $250 for Model 145 and $112 for Model 212. 3. If the market price for Model 145 is $993.57 and the market price for Model 212 is $536.62, determine the profit or loss per unit for each model.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its 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
Components Changeover
Machining
Setups
Finishing Welding
Support
Inspecting
Rework
Purchasing
Providing space
Providing utilities
Units produced
Welding hours
Batches
Number of inspections
Machine hours
Setups
Rework orders
Purchase orders
Required 1
Overhead Cost
$ 559,650
411,510
74,000
$1,045,160
$ 288,640
257,600
55,000
601,240
$
$ 194,540
30,800
37,960
$ 263,300
Additional production Information concerning its two product lines follows.
Required 2
Model 145
1,200
1,200
455
475
3,350
20
150
365
Driver
Number of batches
Machine hours
Number of setups
Required 3
Welding hours
Number of inspections
Rework orders
Purchase orders
Number of units
Number of units
Model 212
2,400
3,200
455
330
5,350
20
100
183
Complete this question by entering your answers in the tabs below.
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 $250 for Model 145
and $112 for Model 212.
Quantity
910
8,700
40
3. If the market price for Model 145 Is $993.57 and the market price for Model 212 is $536.62, determine the profit or loss per unit for
each model.
4,400
805
250
548
3,600
3,600
Using ABC, compute the overhead cost per unit for each product line. (Round your final answers to 2 decimal places.)
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