Question 1

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 (54,000 + 10,200)]. Estimated annual manufacturing overhead is $1,574,800. Thus, the predetermined overhead rate is $16.35 or ($1,574,800 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 companys managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows.

								Estimated Use of Drivers by Product
Activity Cost Pools		Cost Drivers		Estimated Overhead		Estimated Use of Cost Drivers		Home		Commercial
Receiving		Pounds		$87,100		335,000		215,000		120,000
Forming		Machine hours		151,900		35,000		27,000		8,000
Assembling		Number of parts		405,790		217,000		165,000		52,000
Testing		Number of tests		49,980		25,500		15,500		10,000
Painting		Gallons		52,580		5,258		3,680		1,578
Packing and shipping		Pounds		827,450		335,000		215,000		120,000
				$1,574,800

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.) Activity Cost Pool Estimated Overhead Estimated Use of Cost Drivers Activity-Based Overhead Rate x Receiving 80400 335000 Pounds per pound x Forming 150500 35000 Machine hours per machine hour X Assembling 412300 217000 Parts per part nicioni X Testing 51000 25500 Tests per test X Painting 52580 5258) Gallons per gallon X Packing and shipping 837500 335000 Pounds per pound X 1584280 Click if you would like to Show Work for this question: Open Show Work