*Problem 17-1A 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 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 direct labor for 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 completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000 10,200)]. Expected annual manufacturing overhead is $1,580,700. Thus the predetermined overhead rate is $16.41 or ($1,580,700 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: Expected Use of Drivers by Product Expected Activity Cost Pools Cost Estimated Overhead Cost Drivers Drivers Home Commercial Receiving Pounds $81,600 335,000 215,000 120,000 Machine Forming 151,000 35,000 27,000 8,000 hours Number Assembling 217,000 165,000 52,000 415,000 of parts Number Testing 52,000 25,500 15,500 10,000 of tests Gallons 53,100 3,680 Painting 5,258 1,578 Packing and shipping Pounds 828,000 335,000 215,000 120,000 $1,580,700 Your answer is incorrect. Try again. 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 61.97 69.97 Total unit cost Your answer is incorrect. Try again Under ABC, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver). (Round overhead rate to 2 decimal places, e.g. 12.25.) Expected Use of Cost Drivers Estimated Activity-Based Overhead Rate Activity Cost Pool Overhead 55900 Pounds Receiving 31200 per pound Machine hours Forming per machine hour Parts Assembling per part Testing per test Tests Gallons Painting per gallon Pounds Packing and shipping per pound Painting Gallons per gallon Pounds Packing and shipping per pound Your answer is incorrect. Try again. 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 places, e.g. 12.25 and cost assigned to decimal decimal places, e.g. 2,500.) Home Model Commercial Model Expected Use of Activity-Based Cost Assigned Expected Use of Activity-Based Cost Assigned Activity Cost Pool Drivers Overhead Rates Drivers Overhead Rates Receiving Forming Assembling Testing Painting Packing and shipping Total costs assigned (a) Units produced (b) (b) Overhead cost per unit [(a) Your answer is incorrect. Try again. Compute the total cost per unit for each product under ABC. (Round answer to 2 decimal places, e.g. 12.25.) Home Model Commercial Model Total cost per unit Your answer is correct. Classify each of the activities as a value-added activity or a non-value-added activity Activity Receiving Non-value-added Forming Value-added Assembling Value-added Non-value-added Testing Value-added Packing and shipping Value-added Painting
