FIX RED BOXES

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 $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 = 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 Home Commercial 120,000 Activity Cost Pools Receiving Forming Assembling Testing Painting Packing and shipping 335,000 35,000 217,000 Pounds Machine hours Number of parts Number of tests Gallons Pounds Estimated Overhead $83,750 151,900 401,450 48,960 52,580 827,450 $1,566,090 215,000 27,000 165,000 15,500 3,680 215,000 8,000 52,000 10,000 1,578 25,500 5,258 335,000 120,000 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.) Activity Cost Pool Estimated Use of Drivers Home Model Activity-Based Overhead Rates Estimate Drive Cost Assigned Receiving 215000 $ .25 $ 53.750 Forming 27000 $ 4.34 117.180 Assembling 165000 $ 1.85 305.250 Testing 15500 $ 1.92 29.760 1 Painting 3680 $ 10 36.800 215000 $ 2.47 531.050 $ 1073790 Packing and shipping Total costs assigned (a) Units produced (b) Overhead cost per unit [(a) = (b)] 54000 $ 19.88 activity's overhead cost pool to each product based on the use of cost drivers. (Round laces, e.g. 12.25 and cost assigned to O decimal places, e.g. 2,500.) Estimated Use of Drivers Commercial Model Activity-Based Overhead Rates Cost Assigned 120000 $ .25 $ 30000 8000 $ 4.34 34720 52000 $ 1.85 96200 100001528 $ 1.92 19200 1578 $ 10 15780 120000 $ 2.47 296400 $ 492300 10200 $ 48.26