Fireout inc manufactures steel cylinders and nozzles for

Reference no: EM13482219

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 (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multipurpose 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 hrs. x (54,000 + 10,200)]. Expected annual manufacturing overhead is $1,557,480. Thus, the predetermined overhead rate is $16.17 or ($1,557,480 ÷ 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.

				Expected Use of Drivers by Product
Activity Cost Pools	Cost Drivers	Estimated Overhead	Expected Use of Cost Drivers	Home	Commercial
Receiving	Pounds	$70,350	335,000	215,000	120,000
Forming	Machine hours	150,500	35,000	27,000	8,000
Assembling	Number of parts	412,300	217,000	165,000	52,000
Testing	Number of tests	51,000	25,500	15,500	10,000
Painting	Gallons	52,580	5,258	3,680	1,578
Packing and shipping	Pounds	820,750	335,000	215,000	120,000
		$1,557,480

(a) and (b)

(1) Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. $12.25.)

		Home Model		Commercial Model
Total unit cost		$		$

(2) Under ABC, prepare a schedule showing the computations of the activity-based overhead rates. (Round overhead rate to 2 decimal places, e.g. $12.25.)

Activity Cost Pool	Estimated Overhead	Expected Use of Cost Drivers	Activity-Based Overhead Rate
Receiving	$		$	per pound
Forming			$	per machine hour
Assembling			$	per part
Testing			$	per test
Painting			$	per gallon
Packing and shipping			$	per pound
	$

Reference no: EM13482219

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