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Exercise 4-9 Using ABC to assess prices LO P3 Way Cool produces two different models...

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Accounting

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Exercise 4-9 Using ABC to assess prices LO P3 Way Cool produces two different models of air conditioners. The company produces the mechanical systems in their 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 Overhead Cost Driver Quantity $ 506,250 369,722 333,900 $1,209,872 $ 347,420 276,375 49,500 $ 673,295 $ 163,185 32,000 119,320 $ 314,505 Machining Setups Number of batches Machine hours Number of setups 810 8,020 180 Finishing Welding Inspecting Rework Welding hours Number of inspections Rework orders 5, 800 825 220 Purchasing Providing space Providing utilities Purchase orders Number of units Number of units Support 473 7,800 7,800 Additional production information concerning its two product lines follows Model 145 Model 212 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 2,600 2,000 405 455 2,750 90 160 315 5,200 3,800 405 370 5,270 90 60 158

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