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. . Canister manufactures containers for two types of lawn sprayers: PAGE 1. Home Sprayer 2. Commercial Sprayer The home model is a high volume
. . Canister manufactures containers for two types of lawn sprayers: PAGE 1. Home Sprayer 2. Commercial Sprayer The home model is a high volume (40,000 units), half gallon cylinder that holds 2 pounds of chemical The commercial model is a low volume (10,000 units), two-gallon cylinder that holds 10 pounds of chemical. Both products require 2.0 hours of direct labor for completion. Therefore, total annual direct labor hours 100,000 (2.0 hrs. * (40,000 + 10,000)]. Expected annual manufacturing overhead is $1,400,000. Plant-wide overhead is allocated based on direct labor hours. The direct materials cost per unit is $15.00 for the home model and $25.00 for the commercial model. Direct Labor cost is $20 per unit for both home and commercial models. The company manages three activity cost pools and related cost drivers and accumulated overhead by cost pools as follows: Expected use Expected Use Activity Cost Cos Estimated Expected use of for for Pools Drivers Overhead Cost Drivers Home Commercial Forming Machine 200,000 40,000 30,000 10,000 Hours Assembling Number of 400,000 200,000 150,000 50,000 Parts Packing and Pounds 800,000 320,000 200,000 120,000 shipping Total $1,400,000 Instructions: 1. (2pts) Calculate the plant-wide overhead rate for Canister Company. 2. (4pts) Using a plant-wide overhead rate compute the total cost Per Unit of each product. 3. (6pts) Under ABC costing prepare a schedule showing the computations of the activity based overhead rates (per cost driver). 4. (8pts) Prepare a schedule assigning each activity's overhead cost pool to each product based on use of the cost drivers. (Include the computation of overhead cost per unit rounding to the nearest cent) 5. (6pts) Compute the total cost per unit (DM, DL, Ohd.) for each product under ABC costing. 6. (4pts) Determine if traditional costing for Home and Commercial units are Overcosted or Undercosted compared to ABC and by how much
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