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1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $310 for Model 145 and $180 for Model 212. 3. If the market price for Model 145 is $1,400 and the market price for Model 212 is $320, determine the profit or loss per unit for each model.

1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. 2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $310 for Model 145 and $180 for Model 212. 3. If the market price for Model 145 is $1,400 and the market price for Model 212 is $320, determine the profit or loss per unit for each model.

Financial & Managerial Accounting
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter26: Cost Allocation And Activity-Based Costing
Section: Chapter Questions
Problem 26.8EX: Identifying activity bases in an activity-based cost system Select Foods Inc. uses activity-based...
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1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders.
2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $310 for Model 145 and $180 for Model 212.
3. If the market price for Model 145 is $1,400 and the market price for Model 212 is $320, determine the profit or loss per unit for each model.

Exercise 17-9 Using departmental overhead rates to assess prices LO P2 Way Cool produces two different models of alr 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. Activity Components Changeover Machining setups Process Overhead Cost Driver Quantity $ 468,000 Number of batches 870 Machine hours 305,000 231,000 8,560 Number of setups $1,004, 000 Finishing welding welding hours Number of inspections Rework orders 24 186,000 234,000 5,100 Inspecting Rework 895 61,000 210 24 481,000 Purchasing Providing space Providing utilities $ 139,000 35,000 61,000 $ 235,000 Support Purchase orders 465 Number of units 4,750 4,758 Number of units Additional production Information concerning Its two product lines follows. Model 145 Model 212 Units produced welding hours Batches 1,700 1,600 3,850 3,500 435 435 Number of inspections Machine hours 505 390 3,250 5,310 Setups Rework orders 40 40 140 70 Purchase orders 310 155 Requlred: 1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. 2. Determine the total cost per unit for each product line if the direct labor and direct materlals costs per unit are $310 for Model 145 and $180 for Model 212. 3. If the market price for Model 145 Is $1,400 and the market price for Model 212 Is $320, determine the profit or loss per unit for each model.
Transcribed Image Text:Exercise 17-9 Using departmental overhead rates to assess prices LO P2 Way Cool produces two different models of alr 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. Activity Components Changeover Machining setups Process Overhead Cost Driver Quantity $ 468,000 Number of batches 870 Machine hours 305,000 231,000 8,560 Number of setups $1,004, 000 Finishing welding welding hours Number of inspections Rework orders 24 186,000 234,000 5,100 Inspecting Rework 895 61,000 210 24 481,000 Purchasing Providing space Providing utilities $ 139,000 35,000 61,000 $ 235,000 Support Purchase orders 465 Number of units 4,750 4,758 Number of units Additional production Information concerning Its two product lines follows. Model 145 Model 212 Units produced welding hours Batches 1,700 1,600 3,850 3,500 435 435 Number of inspections Machine hours 505 390 3,250 5,310 Setups Rework orders 40 40 140 70 Purchase orders 310 155 Requlred: 1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders. 2. Determine the total cost per unit for each product line if the direct labor and direct materlals costs per unit are $310 for Model 145 and $180 for Model 212. 3. If the market price for Model 145 Is $1,400 and the market price for Model 212 Is $320, determine the profit or loss per unit for each model.
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