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 manufacturing overhead is $1,576,300. Thus, the predetermined overhead rate is $16.37 or ($1,576,300 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 companys managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows:

Expected Use of

Drivers by Product

Activity Cost Pools

Cost Drivers

Estimated Overhead

Expected Use of

Cost Drivers

Home

Commercial

Receiving Pounds

$89,700

335,000

215,000

120,000

Forming Machine hours

151,000

35,000

27,000

8,000

Assembling Number of parts

405,000

217,000

165,000

52,000

Testing Number of tests

51,000

25,500

15,500

10,000

Painting Gallons

57,600

5,258

3,680

1,578

Packing and shipping Pounds

822,000

335,000

215,000

120,000

$1,576,300

a)Under traditional product costing, compute the total unit cost of each product

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 manufacturing overhead is $1,576,300. Thus, the predetermined overhead rate is $16.37 or ($1,576,300 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 companys managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows:

Expected Use of

Drivers by Product

Activity Cost Pools

Cost Drivers

Estimated Overhead

Expected Use of

Cost Drivers

Home

Commercial

Receiving Pounds

$89,700

335,000

215,000

120,000

Forming Machine hours

151,000

35,000

27,000

8,000

Assembling Number of parts

405,000

217,000

165,000

52,000

Testing Number of tests

51,000

25,500

15,500

10,000

Painting Gallons

57,600

5,258

3,680

1,578

Packing and shipping Pounds

822,000

335,000

215,000

120,000

$1,576,300

a) total unit cost Home model and Commercial model