
1.
1.

Explanation of Solution
Table showing total departmental overhead cost of model 145 and model 212:
Activity | Overhead rate ($) | Value of activity driver of model 145 | Value of activity driver for model 212 | Overhead cost of model 145 ($) | Overhead cost of model 212 ($) |
Changeover | 625.0 | 400 | 400 | 250,000 | 250,000 |
Machining | 46.5 | 1,800 | 4,200 | 83,700 | 195,300 |
Setups | 1,875.0 | 60 | 60 | 112,500 | 112,500 |
Welding | 60.0 | 800 | 2,200 | 48,080 | 132,220 |
Inspecting | 300.0 | 400 | 300 | 120,000 | 90,000 |
Reworks | 250.0 | 160 | 140 | 40,000 | 35,000 |
Purchasing | 300.0 | 300 | 150 | 90,000 | 45,000 |
Space | 6.4 | 1,500 | 3,500 | 9,600 | 22,400 |
Utilities | 13.0 | 1,500 | 3,500 | 19,500 | 45,500 |
Total overhead cost | 773,380 | 927,920 |
Formula to compute overhead cost per unit is,
Model 145
Given,
Total units produced are 1,500.
Substitute 1,500 units for produced units and $773,380 for total overhead cost in the formula.
Model 212
Given,
Totalunits produced are 3,500.
Substitute 3,500 units for produced units and $927,920 for total overhead cost in the formula.
Hence, overhead cost per unit for product 145 is $515.59 and for product 212 is $265.12.
Working notes:
Formula to calculate departmental overhead rate is,
Calculation of overhead rate for changeover activity,
Calculation of overhead rate for machining activity,
Calculation of overhead rate for setups activity,
Calculation of overhead rate for welding activity,
Calculation of overhead rate for inspecting activity,
Calculation of overhead rate for rework activity,
Calculation of overhead rate for purchasing activity,
Calculation of overhead rate for providing space activity,
Calculation of overhead rate for providing utility activity,
2.
Total cost per unit for each product line.
2.

Explanation of Solution
Formula to compute total cost per unit is,
Model 145
Given,
Direct labor and material cost per unit is $250.
Overhead cost per unit is $515.59.
Substitute $250 for direct labor and material cost per unit and $515.59 for overhead cost per unit in the formula.
Model 212
Given,
Direct labor and material cost per unit is $180.
Overhead cost per unit is $265.12.
Substitute $180 for direct labor and material cost per unit and $265.12 for overhead cost per unit in the formula.
Hence, total cost per unit for product 145 is $765.59 and for product 212 is $445.12.
3.
Profit or loss per unit for each model.
3.

Explanation of Solution
Formula to compute profit or loss per unit is,
Model 145
Given,
Market price per unit is $820.
Total cost per unit is $765.59.
Substitute $820 for market price per unit and $765.59 for total cost per unit in the formula.
Model 212
Given,
Market price per unit is $480.
Total cost per unit is $445.12.
Substitute $480 for market price per unit and $445.12 for total cost per unit in the formula.
Hence, profit per unit for product 145 is $54.41 andfor product 212 is $34.88.
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