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undefined Question 2 FireOut Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial
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Question 2 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 (60,000 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 (15,220 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 94,025 or [1.25 hrs. x (60,000 + 15,220)]. Estimated annual manufacturing overhead is $1,504,400. Thus, the predetermined overhead rate is $16.00 or ($1,504,400 = 94,025) per direct labour hour. The direct materials cost per unit is $19.00 for the home model and $26.46 for the commercial model. The direct labour cost is $19.20 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: Estimated Overhead Estimated Use of Cost Drivers Activity Cost Pools Cost Drivers Estimated Use of Drivers by Product Home Commercial Receiving Kilograms Forming Machine hours Assembling Number of parts Testing Number of tests Painting Litres Packing and shipping Kilograms $68,000 151,200 397,800 52,000 53,400 782,000 $1,504,400 340,000 217,000 36,000 28,000 221,000 167,000 26,000 16,000 6,000 4,000 340,000 217,000 123,000 8,000 54,000 10,000 2,000 123,000 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 LINK TO TEXT LINK TO TEXT LINK TO TEXT Classify each of the activities as a value-added activity or a non-value-added activity. Receiving Forming Assembling Testing Painting Packing and shippingStep by Step Solution
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