* Question 9 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 (54,000 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 (13,900 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 84,875 or (1.25 hrs. (54,000 + 13,900). Estimated annual manufacturing overhead is $1,493,800. Thus, the predetermined overhead rate is $17.60 or ($1,493,800 = 84,875) per direct labour hour. The direct materials cost per unit is $18.28 for the home model and s27.08 for the commercial model. The direct labour cost is $20.00 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 Estimated Use Estimated Use Activity Cost Pools Cost Drivers Overhead of Cost Drivers of Drivers by Product Home Commercial Receiving Kilograms $67,200 336,000 215,000 121,000 Forming Machine hours 151,700 37,000 29,000 8,000 Assembling Number of parts 396,000 220,000 167,000 53,000 Testing Number of tests 52,200 29,000 17,000 12,000 Painting Litres 53,900 7,000 4,000 3,000 Packing and shipping kilograms 772,800 336,000 215,000 121,000 $1,493,800 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 S $ 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 0 decimal places e.g. 1525.) Est. Est. Cost Cost Pool MOH Usage Rate Drivers Receiving per kilogram $ Forming per machine hr. $ $ Assembly per part $ $ Testing $ per test $ Painting per litre $ $ Packing and shippings per kilogram $ 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 0 decimal places e.g. 1525.) 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 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 costs Classify each of the activities as a value-added activity or a non-value-added activity. Receiving V Forming V Assembling Testing Painting Packing and shipping
