Question 1 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 (53,000 units), half-litre cylinder that holds 2.5 kilograms of multi-purpose dry chemical at 480 PSI (pounds per square inch). The commercial model is a low-volume (9,600 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 93,900 or [1.50 hrs. x (53,000 + 9,600)). Estimated annual manufacturing overhead is $1,502,400. Thus, the predetermined overhead rate is $16.00 or ($1,502,400 + 93,900) per direct labour hour. The direct materials cost per unit is $18.22 for the home model and $27.06 for the commercial model. The direct labour cost is $19.60 per unit for both the home and commercial models. The company's managers identified six activity cost pools and related cost drivers, and estimated overhead by cost pool as follows: Activity Cost Pools Cost Drivers Recelving Kllograms Forming Machine hours Assembling Number of parts Testing Number of tests Painting Litres Packing and shipping Kilograms Estimated Estimated Use Estimated Use Overhead of Cost Drivers of Drivers by Product Home Commercial $67,600 338,000 217,000 121,000 154,000 35,000 27,000 8,000 396,000 220,000 167,000 53,000 54,000 27,000 17,000 10,000 53,400 6,000 4,000 2,000 777,400 338,000 217,000 121,000 $1,502,400 (a) Your answer is correct. Under traditional product costing, calculate the total unit cost of each product. Prepare a simple comparative schedule of the individual costs by product. (Round answers to 2 decimal places, e.g. 15.25.) Products Home Model Commercial Model Manufacturing Costs Direct materials 18.22 27.06 $ S Direct labour 19.60 19.60 Overhead 24.00 24.00 1 Total unit cost 61.82 70.66 (b) Your answer is correct. Under ABC, prepare a schedule showing the calculations of the activity-based overhead rates (per cost driver). (Round rate per cost driver to 2 decimal places, e.g. 15.25 and other answers to O decimal places e.g. 1525.) Cost Pool Est. MOH Est. Usage Rate Cost Drivers Receiving 67600 338000 0.20 per kilogram $1 Forming 154000 35000 4.4 per machine hr. $ Assembly 396000 220000 1.8 per part Testing 54000 27000 2 per test Painting 53400 6000 8.9 per litre $ Packing and shipping 777400 338000 2.3 per kilogram 1502400 LINK TO TEXT LINK TO TEXT LINK TO TEXT Attempts: 1 of 3 used (c) Prepare a schedule assigning each activity's 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 O decimal places e.g. 1525.) Collapse question part Activity-based overhead applied Home Commercial Receiving-kilograms Forming-machine hours Assembly-number of parts Testing-number of tests Painting-litres Packing and shipping-kilograms Total overhead applied Total units produced Per unit overhead cost LINK TO TEXT LINK TO TEXT LINK TO TEXT
