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 ( 50,000 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 ( 9,728 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 74,660 or [ 1.25 hrs. ( 50,000 + 9,728)]. Estimated annual manufacturing overhead is $ 1,493,200. Thus, the predetermined overhead rate is $ 20.00 or ($ 1,493,200 74,660) per direct labour hour. The direct materials cost per unit is $ 18.64 for the home model and $ 26.66 for the commercial model. The direct labour cost is $ 20.20 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 Estimated Overhead Estimated Use of Cost Drivers Use of Drivers by Product Home Commercial 216,000 121,000 27.000 8,000 Receiving Forming Assembling $ 67,400 150,500 337,000 35,000 219,000 167,000 Kilograms Machine hours Number of parts Number of tests Litres Kilograms 394,200 52.000 52,000 10,000 16,000 Testing Painting Packing and shipping 26,000 6,000 337,000 54,000 775,100 $ 1.493,200 4,000 2,000 121,000 216,000