Reference no: EM13597528

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 1 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 × (54,000 + 10,200)]. Expected annual manufacturing overhead is $1,502,280. Thus, the predetermined overhead rate is $15.60 or ($1,502,280 ÷ 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.

• Activity Cost Pool Cost Driver
• Estimated Overhead Expected Use
• of Cost Drivers Expected Use
• of Drivers by Product

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 390,600 217,000 165,000 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 787,250
• 335,000 215,000 120,000
• $1,502,280