Auerbach Enterprises

Introduction
Auerbach Enterprises manufactures air conditioners for automobiles and trucks manufactured throughout North America. The company has two main products MaxiFlow and Alaska. MaxiFlow uses a few complex fabricated parts that have been found easy to assemble and test while Alaska uses standard parts that have a complex assembly and testing process. MaxiFlow requires direct materials costs, which total $135 per unit, while Alaska's direct materials requirements total $110 per unit. Direct labor costs per unit are $75 for MaxiFlow and $95 for Alaska. Auerbach uses machine hours as the cost driver to assign overhead costs to the air conditioners