Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What is the Total Unit Cost for Home & Commercial Model? Prepare a schedule showing the computations of the activity-based overhead rates (per cost driver)

  1. image text in transcribedWhat is the Total Unit Cost for Home & Commercial Model?
  2. Prepare a schedule showing the computations of the activity-based overhead rates (per cost driver)
  3. What is the total cost per unit of Direct Materials, Direct Labor, and Overhead for Home & Commercial Models?
  4. Classify each of the activities as a value-added activity or a non-value-added activity. Receiving, Forming, Assembling, Testing, Painting, Painting& Shipping
Combat Fire, 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-gallon cylinder that holds 2 1/2 pounds of multi-purpose dry chemical at 480 PSI. The commercial model is 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 x (54,000 + 10,200)]. Estimated annual manufacturing overhead is $1,585,378. Thus, the predetermined overhead rate is $16.46 or ($1,585,378 = 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. Estimated Use of Drivers by Product Cost Drivers Pounds Activity Cost Pools Receiving Forming Assembling Testing Painting Packing and shipping Machine hours Number of parts Number of tests Estimated Overhead $87,100 155,050 407,960 49,980 57,838 827,450 $1,585,378 Estimated Use of Cost Drivers 335,000 35,000 217,000 25,500 5,258 335,000 Home 215,000 27,000 165,000 15,500 3,680 215,000 Commercial 120,000 8,000 52,000 10,000 Gallons 1,578 Pounds 120,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Auditing And Other Assurance Services

Authors: Ray Whittington, Kurt Pany

19th International Edition

125909524X, 9781259095245

More Books

Students also viewed these Accounting questions

Question

Make efficient use of your practice time?

Answered: 1 week ago