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Question 2 FireOut Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial
Question 2 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 (58,000 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 (16,780 units), two-litre cylinder that holds 10 kilograms of multi-purpose dry chemical at 390 PSI. Both products require 1.25 hours of direct labour for completion. Therefore, total annual direct labour hours are 93,475 or [1.25 hrs. x (58,000+ 16,780)]. Estimated annual manufacturing overhead is $1,495,600. Thus, the predetermined overhead rate is $16.00 or ($1,495,600 93,475) per direct labour hour. The direct materials cost per unit is $18.46 for the home model and $27.10 for the commercial model. The direct labour cost is $18.80 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: Estimated Activity Cost Pools Cost Drivers Estimated Use Overhead of Cost Drivers Estimated Use of Drivers by Product Home Commercial Receiving Forming Kilograms Machine hours $67,600 338,000 216,000 122,000 150,500 35,000 27,000 8,000 Assembling Number of parts 394,200 219,000 166,000 53,000 Testing Painting Number of tests Litres 51,300 27,000 17,000 10,000 54,600 6,000 4,000 Packing and shipping Kilograms 777,400 $1,495,600 338,000 216,000 2,000 122,000 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 Manufacturing Costs Home Model Commercial Model Direct materials Direct labour Overhead Total unit cost
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