Way Cool produces two different models of air conditioners. The company produces the mechanical systems in its components department. The mechanical...
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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.
 
ProcessActivityOverhead CostDriverQuantityComponentsChangeover $476,150 Number of batches890  Machining  402,050 Machine hours8,500  Setups  410,300 Number of setups220    $1,288,500    FinishingWelding $328,160 Welding hours5,600  Inspecting  262,400 Number of inspections820  Rework  29,900 Rework orders130    $620,460    SupportPurchasing $191,625 Purchase orders525  Providing space  31,200 Number of units4,200  Providing utilities  46,500 Number of units4,200    $269,325    
   
Additional production information concerning its two product lines follows.
 
 Model 145Model 212Units produced 1,400  2,800 Welding hours 1,800  3,800 Batches 445  445 Number of inspections 470  350 Machine hours 3,150  5,350 Setups 110  110 Rework orders 80  50 Purchase orders 350  175 
  
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 $230 for Model 145 and $113 for Model 212.
3. If the market price for Model 145 is $959.24 and the market price for Model 212 is $527.03, determine the profit or loss per unit for each model.
 

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