FireOut, 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-litre cylinder that holds 2.50 kilograms of multi-purpose dry chemical at 480 PSI (pounds per square inch). The commercial model is a low-volume (10,200 units), two-litre cylinder that holds 10 kilograms of multi-purpose dry chemical at 390 PSI. Both products require 1.50 hours of direct labour for completion. Therefore, total annual direct labour hours are 96,300 or [1.50 hrs. (54,000 + 10,200)]. Expected annual manufacturing overhead is $1,502,280. Thus, the predetermined overhead rate is $15.60 or ($1,502,280 96,300) per direct labour hour. The direct materials cost per unit is $18.00 for the home model and $26.00 for the commercial model. The direct labour cost is $18.00 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: | Activity Cost Pools | Cost Drivers | Estimated Overhead | Expected Use of Cost Drivers | Expected Use of Drivers by Product | | Home | Commercial | | Receiving | Kilograms | $70,350 | 335,000 | 215,000 | 120,000 | | Forming | Machine hours | 150,500 | 35,000 | 27,000 | 8,000 | | Assembling | Number of parts | 390,600 | 217,000 | 165,000 | 52,000 | | Testing | Number of tests | 51,000 | 25,500 | 15,500 | 10,000 | | Painting | Litres | 52,580 | 5,280 | 3,680 | 1,600 | | Packing and shipping | Kilograms | 787,250 | 335,000 | 215,000 | 120,000 | | $1,502,280 | Warning | Don't show me this message again for the assignment |
Ok Cancel |
|
| |
