Question
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 (54,000 + 10,200)]. Expected annual manufacturing overhead is $1,542,500. Thus, the predetermined overhead rate is $16.02 or ($1,542,500 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 | $80,000 | 335,000 | 215,000 | 120,000 | |||||
Forming | Machine hours | 145,000 | 35,000 | 27,000 | 8,000 | |||||
Assembling | Number of parts | 400,000 | 217,000 | 165,000 | 52,000 | |||||
Testing | Number of tests | 45,000 | 25,500 | 15,500 | 10,000 | |||||
Painting | Gallons | 52,500 | 5,258 | 3,680 | 1,578 | |||||
Packing and shipping | Pounds | 820,000 | 335,000 | 215,000 | 120,000 | |||||
$1,542,500 |
Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. 12.25.)
Home Model | Commercial Model | |||
---|---|---|---|---|
Total unit cost | $enter a dollar amount rounded to 2 decimal places | $enter a dollar amount rounded to 2 decimal places |
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