ombat 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 $ 1,585,316. Thus, the predetermined overhead rate is $ 16.46 or ($ 1,585,316 ÷ 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 $ 90,450 335,000 215,000 120,000 Forming Machine hours 150,850 35,000 27,000 8,000 Assembling Number of parts 401,450 217,000 165,000 52,000 Testing Number of tests 52,020 25,500 15,500 10,000 Painting Gallons 63,096 5,258 3,680 1,578 Packing and shipping Pounds 827,450 335,000 215,000 120,000 $ 1,585,316
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
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 |
$ 90,450
|
335,000
|
215,000
|
120,000
|
|||||
Forming | Machine hours |
150,850
|
35,000
|
27,000
|
8,000
|
|||||
Assembling | Number of parts |
401,450
|
217,000
|
165,000
|
52,000
|
|||||
Testing | Number of tests |
52,020
|
25,500
|
15,500
|
10,000
|
|||||
Painting | Gallons |
63,096
|
5,258
|
3,680
|
1,578
|
|||||
Packing and shipping | Pounds |
827,450
|
335,000
|
215,000
|
120,000
|
|||||
$ 1,585,316
|
![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 0 decimal places, eg. 2,500.)
Home Model
Activity
Estimated Use of
Activity-Based
Cost Pool
Drivers
Overhead Rates
Cost Assigned
Receiving
120000
0.27
24
32400
Forming
8000
%24
4.31
34480
Assembling
52000
1.85
96200
Testing
10000
%24
2.04
20400
Painting
1578
24
12.00
18936
Packing and
shipping
120000
24
2.47
296400
Total
costs
24
498816
assigned (a)
Units
produced (b)
10200
Overhead
cost per unit
[(a) + (b))
24
48.90
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4224aaa8-b20a-4203-b084-945cc2d052ba%2Ff4dae255-8c9a-48a0-ad8c-4d5c814838c6%2Fr1k5ge_processed.png&w=3840&q=75)
![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 0 decimal places, eg. 2,500.)
Commercial Model
Estimated Use of
Activity-Based
Cost Assigned
Drivers
Overhead Rates
Cost Assigned
32400
24
34480
4.31
27000
96200
1.85
165000
20400
2.04
15500
18936
12
3680
296400
2.47
215000
498816
24
10200
48.90
24
%24
%24
%24
%24
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4224aaa8-b20a-4203-b084-945cc2d052ba%2Ff4dae255-8c9a-48a0-ad8c-4d5c814838c6%2Fyynb9g_processed.png&w=3840&q=75)
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