P4-1A 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)]. Expected annual manu- facturing overhead is $1,584,280. Thus, the predetermined overhead rate is $16.45 or ($1,584,280 ÷ 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. Activity Cost Pools Receiving Forming Assembling Testing Painting Packing and shipping Cost Drivers Pounds Machine hours Number of parts Number of tests Gallons Pounds Estimated Overhead $ 80,400 150,500 412,300 51,000 52,580 837,500 $1,584,280 Expected Use of Cost Drivers 335,000 35,000 217,000 25,500 5,258 335,000 Expected Use of Drivers by Product Home 215,000 27,000 165,000 15,500 3,680 215,000 Commercial 120,000 8,000 52,000 10,000 1,578 120,000
P4-1A 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)]. Expected annual manu- facturing overhead is $1,584,280. Thus, the predetermined overhead rate is $16.45 or ($1,584,280 ÷ 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. Activity Cost Pools Receiving Forming Assembling Testing Painting Packing and shipping Cost Drivers Pounds Machine hours Number of parts Number of tests Gallons Pounds Estimated Overhead $ 80,400 150,500 412,300 51,000 52,580 837,500 $1,584,280 Expected Use of Cost Drivers 335,000 35,000 217,000 25,500 5,258 335,000 Expected Use of Drivers by Product Home 215,000 27,000 165,000 15,500 3,680 215,000 Commercial 120,000 8,000 52,000 10,000 1,578 120,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:(a) Under traditional product costing, compute the total unit cost of each product.
Prepare a simple comparative schedule of the individual costs by product
(b) Under ABC, prepare a schedule showing the computations of the activity-based over-
head rates (per cost driver).
(c) Prepare a schedule assigning each activity's overhead cost pool to each product based
on the use of cost drivers. (Include a computation of overhead cost per unit, rounding
to the nearest cent.)
(d) Compute the total cost per unit for each product under ABC.
(e) Classify each of the activities as a value-added activity or a non-value-added activity.
(f) Comment on (1) the comparative overhead cost per unit for the two products under
ABC, and (2) the comparative total costs per unit under traditional costing and ABC.
(a) Unit cost-H.M. $62.18
(c) Cost assigned-H.M.
$1,086,500
(d) Cost/unit-H.M. $57.62
![P4-1A 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)]. Expected annual manu-
facturing overhead is $1,584,280. Thus, the predetermined overhead rate is $16.45 or
($1,584,280 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.
Activity Cost Pools
Receiving
Forming
Assembling
Testing
Painting
Packing and shipping
Cost Drivers
Pounds
Machine hours
Number of parts
Number of tests
Gallons
Pounds
Estimated
Overhead
$ 80,400
150,500
412,300
51,000
52,580
837,500
$1,584,280
Expected
Use of
Cost
Drivers
335,000
35,000
217,000
25,500
5,258
335,000
Expected Use
of Drivers by
Product
Home
215,000
27,000
165,000
15,500
3,680
215,000
Commercial
120,000
8,000
52,000
10,000
1,578
120,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd8f34c27-d547-42cf-8513-49967d562251%2F2223c1a3-8a8a-47ec-b332-d9b6c6795edd%2Fy3r9wun_processed.png&w=3840&q=75)
Transcribed Image Text:P4-1A 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)]. Expected annual manu-
facturing overhead is $1,584,280. Thus, the predetermined overhead rate is $16.45 or
($1,584,280 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.
Activity Cost Pools
Receiving
Forming
Assembling
Testing
Painting
Packing and shipping
Cost Drivers
Pounds
Machine hours
Number of parts
Number of tests
Gallons
Pounds
Estimated
Overhead
$ 80,400
150,500
412,300
51,000
52,580
837,500
$1,584,280
Expected
Use of
Cost
Drivers
335,000
35,000
217,000
25,500
5,258
335,000
Expected Use
of Drivers by
Product
Home
215,000
27,000
165,000
15,500
3,680
215,000
Commercial
120,000
8,000
52,000
10,000
1,578
120,000
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D, E , F please,
Transcribed Image Text:(a) Under traditional product costing, compute the total unit cost of each product.
Prepare a simple comparative schedule of the individual costs by product
(b) Under ABC, prepare a schedule showing the computations of the activity-based over-
head rates (per cost driver).
(c) Prepare a schedule assigning each activity's overhead cost pool to each product based
on the use of cost drivers. (Include a computation of overhead cost per unit, rounding
to the nearest cent.)
(d) Compute the total cost per unit for each product under ABC.
(e) Classify each of the activities as a value-added activity or a non-value-added activity.
(f) Comment on (1) the comparative overhead cost per unit for the two products under
ABC, and (2) the comparative total costs per unit under traditional costing and ABC.
(a) Unit cost-H.M. $62.18
(c) Cost assigned-H.M.
$1,086,500
(d) Cost/unit-H.M. $57.62
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