Question
SwiftyFire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The
SwiftyFire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. Thehome modelis a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi-purpose dry chemical at 480 PSI. Thecommercial modelis a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours (54,000 + 10,200)]. Estimated annual manufacturing overhead is $1,569,040. Thus, the predetermined overhead rate is $16.29or ($1,569,040 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.
Use of Drivers by Product | |||||||||||||
Activity Cost Pools | Cost Drivers | Estimated Overhead | Estimated Use of Cost Drivers | Home | Commercial | ||||||||
Receiving | Pounds | $87,100 | 335,000 | 215,000 | 120,000 | ||||||||
Forming | Machine hours | 148,050 | 35,000 | 27,000 | 8,000 | ||||||||
Assembling | Number of parts | 407,960 | 217,000 | 165,000 | 52,000 | ||||||||
Testing | Number of tests | 45,900 | 25,500 | 15,500 | 10,000 | ||||||||
Painting | Gallons | 52,580 | 5,258 | 3,680 | 1,578 | ||||||||
Packing and shipping | Pounds | 827,450 | 335,000 | 215,000 | 120,000 | ||||||||
$1,569,040 |
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 Cost Pool | Estimated Overhead | Estimated Use of Cost Drivers | Activity-Based Overhead Rate | ||||||
---|---|---|---|---|---|---|---|---|---|
Receiving | $enter a dollar amount | enter a number of pounds | Pounds | $enter a number per pound rounded to 2 decimal places | per pound | ||||
Forming | enter a dollar amount | enter a number of machine hours | Machine hours | $enter a number per machine hour rounded to 2 decimal places | per machine hour | ||||
Assembling | enter a dollar amount | enter a number of parts | Parts | $enter a number per part rounded to 2 decimal places | per part | ||||
Testing | enter a dollar amount | enter a number of tests | Tests | $enter a number per test rounded to 2 decimal places | per test | ||||
Painting | enter a dollar amount | enter an amount of gallons | Gallons | $enter a number per gallon rounded to 2 decimal places | per gallon | ||||
Packing and shipping | enter a dollar amount | enter an amount of pounds | Pounds | $enter a number per pound rounded to 2 decimal places | per pound | ||||
$enter a total amount |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started