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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

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.

Process Activity Overhead Cost Driver Quantity
Components Changeover $ 491,550 Number of batches 870
Machining 378,624 Machine hours 8,160
Setups 330,300 Number of setups 180
$ 1,200,474
Finishing Welding $ 213,720 Welding hours 3,900
Inspecting 283,900 Number of inspections 835
Rework 55,000 Rework orders 200
$ 552,620
Support Purchasing $ 155,925 Purchase orders 495
Providing space 30,200 Number of units 5,700
Providing utilities 76,960 Number of units 5,700
$ 263,085

Additional production information concerning its two product lines follows.

Model 145 Model 212
Units produced 1,900 3,800
Welding hours 800 3,100
Batches 435 435
Number of inspections 465 370
Machine hours 2,850 5,310
Setups 90 90
Rework orders 120 80
Purchase orders 330 165

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 $180 for Model 145 and $113 for Model 212. 3. If the market price for Model 145 is $663.73 and the market price for Model 212 is $402.42, determine the profit or loss per unit for each model.

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