Combat Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi-purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours × (54,000 + 10,200)]. Estimated annual manufacturing overhead is $1,588,566. Thus, the predetermined overhead rate is $16.50 or ($1,588,566 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models.The company’s managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows. Estimated Use ofDrivers by ProductActivity Cost Pools Cost Drivers Estimated Overhead Estimated Use ofCost Drivers Home CommercialReceiving Pounds $87,100 335,000 215,000 120,000Forming Machine hours 155,050 35,000 27,000 8,000Assembling Number of parts 412,300 217,000 165,000 52,000Testing Number of tests 46,920 25,500 15,500 10,000Painting Gallons 63,096 5,258 3,680 1,578Packing and shipping Pounds 824,100 335,000 215,000 120,000 $1,588,566 Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. 12.50.)Home ModelCommercial ModelTotal unit cost2$2$eTextbook and MediaUnder ABC, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver). (Roundoverhead rate to 2 decimal places, e.g. 12.25.)Activity-BasedOverhead RateActivityEstimatedEstimatedCost PoolOverheadUse of Cost DriversReceiving2$Pounds$MachineForming$hoursAssemblingParts2$TestingTests2$PaintingGallonsPackingandPoundsshipping$eTextbook and Media%24 Prepare a schedule assigning each activity's overhead cost pool to each product based on the use of cost drivers. (Roundoverhead cost per unit to 2 decimal places, e.g. 12.25 and cost assigned to O decimal places, e.g. 2,500.)Home ModelActivityEstimated Use ofActivity-BasedOverhead RatesEstiCost PoolDriversCost AssignedReceiving2$FormingAssembling$Testing$Painting$Packing andshippingTotalcosts$assigned (a)Unitsproduced(b)Overheadcost perunit [(a) ÷(b)]2$eTextbook and MediaCompute the total cost per unit for each product under ABC. (Round answer to 2 decimal places, e.g. 12.25.)Home ModelCommercial ModelTotal cost per unit$$%24%24%24

Overhead Costs-: In any organization, overhead or overhead expenditure pertains to a continuous…

Answered: nozzles for two models of fire…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Combat Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi-purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours × (54,000 + 10,200)]. Estimated annual manufacturing overhead is $1,588,566. Thus, the predetermined overhead rate is $16.50 or ($1,588,566 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models.

The company’s managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows.

				Estimated Use of Drivers by Product
Activity Cost Pools	Cost Drivers	Estimated Overhead	Estimated Use of Cost Drivers	Home	Commercial
Receiving	Pounds	$87,100	335,000	215,000	120,000
Forming	Machine hours	155,050	35,000	27,000	8,000
Assembling	Number of parts	412,300	217,000	165,000	52,000
Testing	Number of tests	46,920	25,500	15,500	10,000
Painting	Gallons	63,096	5,258	3,680	1,578
Packing and shipping	Pounds	824,100	335,000	215,000	120,000
		$1,588,566

Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. 12.50.)
Home Model
Commercial Model
Total unit cost
2$
2$
eTextbook and Media
Under ABC, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver). (Round
overhead rate to 2 decimal places, e.g. 12.25.)
Activity-Based
Overhead Rate
Activity
Estimated
Estimated
Cost Pool
Overhead
Use of Cost Drivers
Receiving
2$
Pounds
$
Machine
Forming
$
hours
Assembling
Parts
2$
Testing
Tests
2$
Painting
Gallons
Packing
and
Pounds
shipping
$
eTextbook and Media
%24

Prepare a schedule assigning each activity's overhead cost pool to each product based on the use of cost drivers. (Round
overhead cost per unit to 2 decimal places, e.g. 12.25 and cost assigned to O decimal places, e.g. 2,500.)
Home Model
Activity
Estimated Use of
Activity-Based
Overhead Rates
Esti
Cost Pool
Drivers
Cost Assigned
Receiving
2$
Forming
Assembling
$
Testing
$
Painting
$
Packing and
shipping
Total
costs
$
assigned (a)
Units
produced
(b)
Overhead
cost per
unit [(a) ÷
(b)]
2$
eTextbook and Media
Compute the total cost per unit for each product under ABC. (Round answer to 2 decimal places, e.g. 12.25.)
Home Model
Commercial Model
Total cost per unit
$
$
%24
%24
%24

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