Question
Sunland Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The
Sunland 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 ( 40,000 units), half-litre cylinder that holds 2.50 kilograms of multi-purpose dry chemical at 480 PSI (pounds per square inch). The commercial model is a low-volume ( 9,000 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 61,250 or [ 1.25 hrs. ( 40,000 + 9,000)]. Estimated annual manufacturing overhead is $ 1,489,600. Thus, the predetermined overhead rate is $ 24.32 or ($ 1,489,600 61,250) per direct labour hour. The direct materials cost per unit is $ 18.40 for the home model and $ 26.48 for the commercial model. The direct labour cost is $ 19.40 per unit for both the home and commercial models. The companys managers identified six activity cost pools and related cost drivers, and estimated overhead by cost pool as follows:
Activity Cost Pools | Cost Drivers | Estimated Overhead | Estimated Use of Cost Drivers | Use of Drivers by Product | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Home | Commercial | ||||||||||
Receiving | Kilograms | $ 67,400 | 337,000 | 217,000 | 120,000 | ||||||
Forming | Machine hours | 151,700 | 37,000 | 29,000 | 8,000 | ||||||
Assembling | Number of parts | 390,600 | 217,000 | 165,000 | 52,000 | ||||||
Testing | Number of tests | 52,000 | 26,000 | 16,000 | 10,000 | ||||||
Painting | Litres | 52,800 | 6,000 | 4,000 | 2,000 | ||||||
Packing and shipping | Kilograms | 775,100 | 337,000 | 217,000 | 120,000 | ||||||
$ 1,489,600 |
(a)
Correct answer icon
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 | ||||
---|---|---|---|---|
Manufacturing Costs | Home Model | Commercial Model | ||
Direct materials | $ enter a dollar amount | $ enter a dollar amount | ||
Direct labour | enter a dollar amount | enter a dollar amount | ||
Overhead | enter a dollar amount | enter a dollar amount | ||
Total unit cost | $ enter a total amount | $ enter a total amount |
eTextbook and Media
Attempts: 1 of 3 used
(b)
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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 0 decimal places e.g. 1525.)
Cost Pool | Est. MOH | Est. Usage | Rate | Cost Drivers | |||||
---|---|---|---|---|---|---|---|---|---|
Receiving | $ enter a dollar amount | enter a dollar amount | $ enter a dollar amount rounded to 2 decimal places | per kilogram | |||||
Forming | $ enter a dollar amount | enter a dollar amount | $ enter a dollar amount rounded to 2 decimal places | per machine hr. | |||||
Assembly | $ enter a dollar amount | enter a dollar amount | $ enter a dollar amount rounded to 2 decimal places | per part | |||||
Testing | $ enter a dollar amount | enter a dollar amount | $ enter a dollar amount rounded to 2 decimal places | per test | |||||
Painting | $ enter a dollar amount | enter a dollar amount | $ enter a dollar amount rounded to 2 decimal places | per litre | |||||
Packing and shipping | $ enter a dollar amount | enter a dollar amount | $ enter a dollar amount rounded to 2 decimal places | per kilogram | |||||
$ enter a total amount |
eTextbook and Media
Attempts: 2 of 3 used
(c)
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Your answer is partially correct.
Prepare a schedule assigning each activitys 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 | |
---|---|---|---|
Receivingkilograms | $ enter a dollar amount | $ enter a dollar amount | |
Formingmachine hours | enter a dollar amount | enter a dollar amount | |
Assemblynumber of parts | enter a dollar amount | enter a dollar amount | |
Testingnumber of tests | enter a dollar amount | enter a dollar amount | |
Paintinglitres | enter a dollar amount | enter a dollar amount | |
Packing and shippingkilograms | enter a dollar amount | enter a dollar amount | |
Total overhead applied | $ enter the total overhead applied in dollars | $ enter the total overhead applied in dollars | |
Total units produced | enter a total number of units | enter a total number of units | |
Per unit overhead cost | $ enter the per unit overhead cost in dollars rounded to 2 decimal places | $ enter the per unit overhead cost in dollars rounded to 2 decimal places |
eTextbook and Media
Attempts: 3 of 3 used
(d)
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 | $ enter a dollar amount rounded to 2 decimal places | $ enter a dollar amount rounded to 2 decimal places |
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