Problems: Set A P17.1A (LO 1, 2, 3) 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 chemi- cal 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 $1,584,280. Thus, the predetermined overhead rate is $16.45 or ($1,584,280+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 S19 per unit for both the home and the commercial models. Assign overhead using traditional costing and ABC: compute unit costs classify activities as value- or non value-added Excel The company's managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows Estimated Use Estimated of Drivers by Use of Product Cost Drivers 335,000 35,000 217,000 25,500 5,258 335,000 Estimated Commercial ome Activity Cost Pools Receiving Forming Assembling Testing Painting Packing and shipping Overhead Cost Drivers 120,000 S 80,400 150,500 412.300 215,000 Pounds 8,000 27,000 165,000 15,500 3,680 215,000 Machine hours Number of parts Number of tests 52,000 10,000 1,578 51,000 52,580 837,500 Gallons 120,000 Pounds $1,584,280 17-39 Problems: Set A Instructions a. Under traditional product costing, compute the total unit cost of each product. Prepare a simple comparative schedule of the individual costs by product (similar to Illustration 17.3) b. Under ABC, prepare a schedule showing the computations of the activity-based overhead rates (per cost driver) e. Prepare a schedule assigning each activity's overhead cost pool to each product based on the use of cost drivers. (Include a computation of overhead cost per unit, rounding to the nearest cent.) d. Compute the total cost per unit for each product under ABC Classify each of the activities as a value-added activity or a non-value-added activity a. Unit cost-H.M. $62.18 c Cost assigned-HM $1,086,500 d. Cost/unit-H.M. $57.62 e. f. Comment on (1) the comparative overhead cost per unit for the two products under ABC, and iinnal nsina and ARC