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Question & Answer: 500,000 800 279,000 Machine hours 6,000 120 Components Changeover batches Machining Setups 225,000 Number of setups $1,004,000 Finishing Welding…..

500,000 800 279,000 Machine hours 6,000 120 Components Changeover batches Machining Setups 225,000 Number of setups $1,004,000 Finishing Welding $ 180,300 Welding hours3,000 700 300 Number of Inspecting 210,000 inspections Rework 75,000 Rework orders $465,300 Purchasing Providing space Providing utilities $ 135,000 Purchase orders 450 32,000 Number of units 5,000 65,000 Number of units 5,000 Support $ 232,000 Additional production information concerning its two product lines follows. Model 145 Model 212 1,500 800 400 3,500 2,200 400 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 400 300 1,800 60 160 300 4,200 60 140 150 Required 1. Using a plantwide overhead rate based on machine hours, 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 $250 for Model 145 and $180 for Model 212 Overhead Assigned Activity Plantwide Total OverheadUnits OH Cost Cost DriverOH rate Produced per unit Model 145 Model 212 Model 145 Model 212 3. If the market price for Model 145 is $820 and the market price for Model 212 is $480 determin月thA nrofitr | ss nAr unit for Aach model

500,000 800 279,000 Machine hours 6,000 120 Components Changeover batches Machining Setups 225,000 Number of setups $1,004,000 Finishing Welding $ 180,300 Welding hours3,000 700 300 Number of Inspecting 210,000 inspections Rework 75,000 Rework orders $465,300 Purchasing Providing space Providing utilities $ 135,000 Purchase orders 450 32,000 Number of units 5,000 65,000 Number of units 5,000 Support $ 232,000 Additional production information concerning its two product lines follows. Model 145 Model 212 1,500 800 400 3,500 2,200 400 Units produced Welding hours Batches Number of inspections Machine hours Setups Rework orders Purchase orders 400 300 1,800 60 160 300 4,200 60 140 150 Required 1. Using a plantwide overhead rate based on machine hours, 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 $250 for Model 145 and $180 for Model 212 Overhead Assigned Activity Plantwide Total OverheadUnits OH Cost Cost DriverOH rate Produced per unit Model 145 Model 212 Model 145 Model 212 3. If the market price for Model 145 is $820 and the market price for Model 212 is $480 determin月thA nrofitr | ss nAr unit for Aach model

Expert Answer

 

Solution:
1. Let us first compute the Plantwide overhead rate = Total overhead cost / machine hours
= ($1,004,000+ 465,300 + 232,000)/ 6,000 machine hours
Overhead cost per unit = $283.55 per machine hour.

2. Computation of total cost per unit for each product line:

Overhead assigned Activity driver Plantwide overhead rate Total overhead costs Units produced OH cost per unit
Model 145 1,800 machine hours $283.55 per machine hour $510,390 1,500 $340.26
Model 212 4,200 machine hours $283.55 per machine hour $1,190,910 3,500 $340.26
Total cost per unit for each product line
Model 145 Model 212
Direct material and labor $250 $180
OH cost per unit $340.26 $340.26
Total cost per unit $590.26 $520.26

3. Determining the profit or loss:

Model 145 Model 212
Market price (given) $820 $480
Less: cost per unit (as above) $590.26 $520.26
Profit or (loss) $229.74 $(40.26)
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