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, e.g. 2,500.)
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, e.g. 2,500.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Waterway 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 x (54,000+ 10,200)]. Estimated annual manufacturing overhead is $1,573,108. Thus, the
predetermined overhead rate is $16.34 or ($1,573,108 ÷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
Activity Cost Pool
Receiving
Forming
Assembling
Testing
Painting
Packing and shipping
Total costs assigned (a)
Units produced (b)
Cost Drivers
Overhead cost per unit [(a) + (b)]
Pounds
Machine hours
Number of parts
Number of tests
Gallons
Pounds
Use of Drivers
by Product
$
$
$
$
$
Estimated Overhead
$
$87,100
Home Model
150,150
Activity-Based
Overhead Rates
399,280
47,940
$1,573,108
57,838
830,800
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, e.g. 2,500.)
$
$
$
Estimated Use of
Cost Drivers
Cost Assigned
335,000
35,000
217,000
25,500
5,258
335,000
Use of
Drivers by Product
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
Commercial Model
Activity-Based
Overhead Rates
$
$
$
Cost Assigned](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1a88f93e-9dfb-4d45-837c-60cfbeefd36f%2F70c8ff1a-3254-4b12-8caa-7cfb57adc1c8%2Fu1jlx8l_processed.png&w=3840&q=75)
Transcribed Image Text:Waterway 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 x (54,000+ 10,200)]. Estimated annual manufacturing overhead is $1,573,108. Thus, the
predetermined overhead rate is $16.34 or ($1,573,108 ÷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
Activity Cost Pool
Receiving
Forming
Assembling
Testing
Painting
Packing and shipping
Total costs assigned (a)
Units produced (b)
Cost Drivers
Overhead cost per unit [(a) + (b)]
Pounds
Machine hours
Number of parts
Number of tests
Gallons
Pounds
Use of Drivers
by Product
$
$
$
$
$
Estimated Overhead
$
$87,100
Home Model
150,150
Activity-Based
Overhead Rates
399,280
47,940
$1,573,108
57,838
830,800
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, e.g. 2,500.)
$
$
$
Estimated Use of
Cost Drivers
Cost Assigned
335,000
35,000
217,000
25,500
5,258
335,000
Use of
Drivers by Product
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
Commercial Model
Activity-Based
Overhead Rates
$
$
$
Cost Assigned
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