Plant-wide overhead rate is a single rate used for the whole plant based on pre-determined basis. And the plant-wide overhead rate is used for the absorption of overheads in various jobs. Requirement1: The Plant-wide pre-determined overhead rate of the service industry need to be determined.

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Chapter 2, Problem 7E

To determine

Plant-wide overhead rate is a single rate used for the whole plant based on pre-determined basis. And the plant-wide overhead rate is used for the absorption of overheads in various jobs.

Requirement1:

The Plant-wide pre-determined overhead rate of the service industry need to be determined.

To determine

The job cost of the client shall be prepared.

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Coronado 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 $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 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…

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