Problem 5-35A

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 $18.64 for the home model and $26.66 for the commercial model. The direct labour cost is $20.20 per unit for both the home and the commercial models.

Prepare a schedule assigning each activitys overhead cost pool to each product based on the use of cost drivers. (Round per unit cost to 2 decimal places, e.g. 15.25 and other answers to 0 decimal places e.g. 1525.)

Activity-based overhead applied	Home		Commercial
Receiving-kilograms	$		$
Formingmachine hours
Assemblynumber of parts
Testingnumber of tests
Paintinglitres
Packing and shipping-kilograms
Total overhead applied	$		$
Total units produced
Per unit overhead cost	$		$

Calculate the total cost per unit for each product under ABC. (Round answers to 2 decimal places, e.g. 15.25.)

		Home	Commercial
Per unit cost		$	$

Classify each of the activities as a value-added activity or a nonvalue-added activity.

Receiving	Value-added or Non-value-added
Forming	Value-added or Non-value-added
Assembling	Non-value-added or Value-added
Testing	Non-value-added or Value-added
Painting	Non-value-added or Value-added
Packing and shipping	Value-added or Non-value-added