Exercise 17-8 Using departmental overhead rates to assess pricesLO P2 Way Cool produces two different models of air conditioners.The company produces the mechanical systems in their componentsdepartment. The mechanical systems are combined with the housingassembly in its finishing department. The activities, costs, anddrivers associated with these two manufacturing processes and theproduction support process follow. Process Activity Overhead CostDriver Quantity Components Changeover $ 452,000 Number of batches790 Machining 313,000 Machine hours 7,920 Setups 226,000 Number ofsetups 100 $ 991,000 Finishing Welding $ 184,000 Welding hours4,400 Inspecting 230,000 Number of inspections 900 Rework 64,500Rework orders 210 $ 478,500 Support Purchasing $ 143,000 Purchaseorders 477 Providing space 32,500 Number of units 5,170 Providingutilities 67,000 Number of units 5,170 $ 242,500 Additionalproduction information concerning its two product lines follows.Model 145 Model 212 Units produced 2,100 3,070 Welding hours 1,0003,400 Batches 395 395 Number of inspections 520 380 Machine hours2,650 5,270 Setups 50 50 Rework orders 150 60 Purchase orders 318159 Required: 1. Determine departmental overhead rates and computethe overhead cost per unit for each product line. Base youroverhead assignment for the components department on machine hours.Use welding hours to assign overhead costs to the finishingdepartment. Assign costs to the support department based on numberof purchase orders. 2. Determine the total cost per unit for eachproduct line if the direct labor and direct materials costs perunit are $230 for Model 145 and $120 for Model 212. 3. If themarket price for Model 145 is $1,175 and the market price for Model212 is $290, determine the profit or loss per unit for eachmodel.