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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.

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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. 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)). Estimated annual manufacturing overhead is $1.569,238. Thus, the predetermined overhead rate is $16,30 or ($1,569,238 + 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. Estimated Use of Drivers by Product Estimated Use of Cost Drivers Cost Drivers Activity Cost Pools Home Commercial 120,000 Estimated Overhead $83,750 155050 Pounds 335,000 Receiving 215,000 Forming Machine hours 8,000 35,000 27,000 403,620 217.000 165,000 Assembling 52,000 Number of parts Number of tests 25,500 10,000 44,880 15,500 Testing 5.258 3,680 1.578 Painting Gallons 57.838 824.100 335,000 215,000 Pounds 120,000 Packing and shipping $1.569.238 18 Instructions (a) Under traditional product costing, compute the total unit cost of each product. Prepare a simple comparative schedule of the individual costs by product (similar to Illustration 17-3 on page 837). (b) Under ABC, prepare a schedule showing the computations of the activity-based over- head rates (per cost driver). (c) Prepare a schedule assigning each activity's overhead cost pool to each product based on the use of cost drivers. (Include a computation of overhead cost per unit, rounding to the nearest cent.) (d) Compute the total cost per unit for each product under ABC. (e) Classify each of the activities as a value-added activity or a non-value-added activity

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