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 (50,000 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 (10,080 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 75,100 or [1.25 hrs. (50,000 + 10,080)]. Estimated annual manufacturing overhead is $1,502,000. Thus, the predetermined overhead rate is $20.00 or ($1,502,000 = 75,100) per direct labour hour. The direct materials cost per unit $18.42 for the home model and $27.16 for the commercial model. The direct labour cost is $18.20 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 Receiving Kilograms 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 $67,800 339,000 217,000 122,000 150,500 35,000 27,000 8,000 396,000 220,000 167,000 53,000 54,600 26,000 16,000 10,000 53,400 6,000 4,000 2,000 779,700 339,000 217,000 122,000 $1,502,000 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 Home Model Commercial Model Manufacturing Costs 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 Direct labour Overhead Total unit cost LINK TO TEXT LINK TO TEXT LINK TO TEXT 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.) Est. MOH Cost Pool Est. Usage Rate Cost Drivers Receiving per kilogram Forming per machine hr. Accombe nart 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.) Est. MOH Est. Usage Cost Drivers Cost Pool Rate Receiving per kilogram $ $ Forming per machine hr. $ $ Assembly per part $ $ Testing per test $ $ Painting per litre $ $ Packing and shipping per kilogram $ $ $ LINK TO TEXT LINK TO TEXT LINK TO TEXT 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.) 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.) Home Commercial Activity-based overhead applied 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 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 LINK TO TEXT LINK TO TEXT LINK TO TEXT Classify each of the activities as a value-added activity or a non-value-added activity. Receiving Forming Assembling Testing Painting Packing and shipping
