Using the plant wide Overhead rate to assess prices L.O. A1, P1

Using the plantwide Overhead rate to assess prices L.O. A1, P1

 

Real 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.

 

 

 

Process Activity Overhead Cost Driver Quantity
  Components   Changeover $ 500,000 Number of batches 800
  Machining 279,000 Machine hours 6,000
  Setups 225,000 Number of setups 120


$ 1,004,000
  Finishing   Welding $ 180,300 Welding hours 3,000
  Inspecting 210,000 Number of inspections 700
  Rework 75,000 Rework orders 300


$ 465,300
  Support   Purchasing $ 135,000 Purchase orders 450
  Providing space 32,000 Number of units 5,000
  Providing utilities 65,000 Number of units 5,000


$ 232,000





 

 

 

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

 

 Place Your Order Here!

Leave a Comment

Your email address will not be published. Required fields are marked *