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Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers...

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Accounting

Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow.

Process Activity Budgeted Cost Activity Cost Driver Budgeted Activity Usage
Assembly Machining $ 310,600 Machine hours (MH) 7,600
Setups 28,000 Setups 240
$ 338,600
Finishing Inspecting $ 234,000 Inspections 900
Support Purchasing $ 134,000 Purchase orders 510

Additional production information concerning its two models follows.

Units and Activities Model X Model Z
Units produced 2,200 4,400
Machine hours 2,200 5,400
Setups 80 160
Inspections 540 360
Purchase orders 340 170

Per Unit Model X Model Z
Selling price per unit $ 410 $ 390
Direct materials cost per unit 145 120
Direct labor cost per unit 140 140

1. Compute the activity rate for each activity using activity-based costing. 2. Using activity-based costing, compute the overhead cost per unit for each model. 3. Compute the total product cost per unit for each model. 4. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit).

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