4.

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	Overhead Cost				Driver	Quantity
Components	Changeover		$	491,250		Number of batches	750
	Machining			385,278		Machine hours	8,180
	Setups			72,200		Number of setups	40
			$	948,728
Finishing	Welding		$	306,800		Welding hours	5,200
	Inspecting			258,850		Number of inspections	835
	Rework			44,000		Rework orders	160
			$	609,650
Support	Purchasing		$	153,430		Purchase orders	458
	Providing space			30,200		Number of units	3,900
	Providing utilities			41,560		Number of units	3,900
			$	225,190

Additional production information concerning its two product lines follows.

	Model 145			Model 212
Units produced		1,300			2,600
Welding hours		1,000			4,200
Batches		375			375
Number of inspections		475			360
Machine hours		2,850			5,330
Setups		20			20
Rework orders		80			80
Purchase orders		305			153

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 $122 for Model 212. 3. If the market price for Model 145 is $843.13 and the market price for Model 212 is $512.15, determine the profit or loss per unit for

Model 145 Model 212 Activity Expected Costs Expected Activity Activity Rate Activity driver incurred Overhead assigned Activity driver incurred Overhead assigned Components Changeover $491,250 750 Number of batches Machining 385,278 8,180 Machine hours Setups 72,200 40 Setups Finishing Welding $306,800 5,200 Welding hours Inspecting 258,850 835 Inspections Rework 44,000 160 Rework orders Support Purchasing $153,430 458 Purchase orders Providing space and utilities 71,760 3,900 Units Total overhead cost $0 $0 Total units produced Overhead cost per unit

	Model 145 Model 212 Materials and Labor per unit Overhead cost per unit Total cost per unit

	Model 145 Model 212 Price per unit Cost per unit Profit (loss) per unit