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 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
|
|
|
|
|
|
|
|
|
Under traditional product costing, compute the total unit cost of both products. (Round your answers to 2 decimal places, i.e. 10.50.)
|
Home Model
|
$
|
|
Commercial Model
|
$
|
Under ABC, complete the schedule showing the computations of the activity-based overhead rates (per cost driver). (Round answers to 2 decimal places, e.g. 10.50.)
|
Activity Cost Pool
|
Cost Driver
|
Estimated Overhead
|
Expected Use of
Cost Drivers
|
Activity-based Overhead Rates
|
|
Receiving
|
|
Pounds
|
$70,350
|
|
335,000
|
|
$ 0.21
|
per pound
|
|
Forming
|
|
Machine hours
|
150,500
|
|
35,000
|
|
$ 4.30
|
per machine hour
|
|
Assembling
|
|
Number of parts
|
390,600
|
|
217,000
|
|
$ 1.80
|
per number of parts
|
|
Testing
|
|
Number of tests
|
51,000
|
|
25,500
|
|
$ 2.00
|
per number of tests
|
|
Painting
|
|
Gallons
|
52,580
|
|
5,258
|
|
$ 10.00
|
per gallon
|
|
Packing and shipping
|
ð |
Pounds
|