Question 4 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 Expected annual manufacturing overhead is $1.567,400. Thus, the predetermined overhead rate is $16.28 or ($1,567,400 + 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 company's managers identified six activity cost pools and related cost drivers and accumulated overhead by cost pool as follows: Expected Use of Drivers by Product Expected Use of Cost Drivers Activity Cost Pools Cost Drivers Estimated Overhead Home Commercial Pounds 335,000 Receiving $85,500 215,000 120,000 35,000 Forming 153,000 Machine hours 27,000 8,000 Number of parts Assembling 410,000 217,000 165,000 52,000 Number of tests Testing 45,000 25,500 15,500 10,000 Painting Gallons 53,900 5,258 3,680 1,578 Packing and shipping Pounds 820,000 335,000 215.000 120.000 $1,567,400 each product. (Round answers to 2 decimal places, e.g. 12.25.) Under traditional product costing, compute the total unit cost Home Model Commercial Model Total unit cost 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-Based Overhead Rate Estimated Expected Activity Cost Pool Overhead Use of Cost Drivers Receiving Pounds per pound Machine hours Forming per machine hour Assembling Parts per part Tests Testing per test Painting Gallons per gallon Packing and shipping Pounds per pound Per to 0 decimal places, e.a. 2.500 ead cost pool to each product based on the use of cost drivers. (Round overhead cost per unit to 2 decimal places, e.g. 12.25 and cost Home Model Commercial Model Expected Use of Drivers Activity-Based Overhead Rates Cost Assigned Expected Use of Activity-Based Drivers Activity Cost Pool Overhead Rates Cost Assigned Receiving Forming Assembling Testing Painting Packing and shipping Total costs assigned (a) Units produced (b) Overhead cost per unit [(a) (b)] Compute the total cost per unit for each product under ABC. (Round answer to 2 decimal places, e.g. 12.25.) Home Model Commercial Model Total cost per unit $ LINK TO TEXT LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR PROBLEM Classify each of the activities as a value-added activity or a non-value-added activity Activity Receiving Forming Assembling Testing Painting 4 Packing and shipping
