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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.
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 x (54,000 + 10,200)]. Estimated annual manufacturing overhead is $1,588,566. Thus, the predetermined overhead rate is $16.50 or ($1,588,566 = 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 Cost Drivers Estimated Overhead Receiving Pounds $87,100 Forming Machine hours 155,050 Assembling Number of parts 412,300 Number of tests 46,920 Gallons 63,096 Packing and shipping Pounds 824,100 $1,588,566 Estimated Use of Drivers by Product Estimated Use of Cost Drivers Home Commercial 335,000 215,000 120,000 35,000 27,000 8,000 217,000 165,000 52,000 25,500 15,500 10,000 5,258 3,680 1,578 335,000 215,000 120,000 Testing Painting Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, eg. 12.50.) Home Model Commercial Model Total unit cost $ e Textbook and Media Under ABC, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver). (Round overhead rate to 2 decimal places, e.g. 12.25.) Activity Cost Pool Estimated Overhead Receiving Forming Assembling Testing Painting Packing and shipping Estimated Use of Cost Drivers Pounds $ Machine hours $ Parts Tests Gallons Pounds Activity-Based Overhead Rate per pound per machine hour per part per test per gallon per pound eTextbook and Media 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 Drivers Home Model Activity-Based Overhead Rates Commercial Model Activity-Based Overhead Rates Estimated Use of Drivers Cost Assigned Cost Assigned LA LA LA LA LA LA LA LA LA LA LA Activity Cost Pool Receiving Forming Assembling Testing Painting Packing and shipping Total costs assigned (a) Units produced (b) Overhead cost per unit [(a): (b)] Compute the total cost per unit for each product under ABC. (Round answer to 2 decimal places, e.g. 12.25.) Home Model Commercial Model Total cost per unit $ eTextbook and Media Classify each of the activities as a value-added activity or a non-value-added activity. Activity Receiving Forming Assembling Testing Painting Packing and shipping e Textbook and Media
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