Refer to the information in Exercise 4-7 to answer the following requirements.

Required

1. Determine departmental overhead rates and compute the overhead cost per unit for each product line. Base your overhead assignment for the components department on machine hours. Use welding hours to assign overhead costs to the finishing department. Assign costs to the support department based on number of purchase orders.

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 $180 for Model 212.

3. If the market price for Model 145 is $820 and the market price for Model 212 is $480, determine the profit or loss per unit for each model. Comment on the results.

In Exercise 4-7

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.

Additional production information concerning its two product lines follows.
_________________________Model 145 ___________Model 212
Units produced . . . . . . . . . . . . . . . 1,500 ...................... 3,500
Welding hours . . . . . . . . . . . . . . . . . 800 ...................... 2,200
Batches . . . . . . . . . . . . . . . . . . . . . . 400 ........................ 400
Number of inspections . . . . . . . . . . 400 ........................ 300
Machine hours . . . . . . . . . . . . . . . . 1,800 ..................... 4,200
Setups . . . . . . . . . . . . . . . . . . . . . . . . 60 .......................... 60
Rework orders . . . . . . . . . . . . . . . . 160 ......................... 140
Purchase orders . . . . . . . . . . . . . . . 300 ......................... 150

Quantity 800 6,000 120 Process Activity Overhead Cost Driver 500,000 Number of batches 279,000 Machine hours ComponentsChangeover Machining Setups 225,000 Number of setups $1,004.000 Finishing Welding Inspecting Rework 180.300 Welding hours 210,000 Number of inspections 3,000 700 300 75000 Rework orders Support 135,000 Purchase orders Purchasing Providing space Providing utilities 32,000 65,000 $ 232.000 450 5,000 5,000 Number of units Number of units