Question

Sheridan 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 × (54,000 + 10,200)]. Estimated annual manufacturing overhead is $1,577,770. Thus, the predetermined overhead rate is $16.38 or ($1,577,770 ÷ 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.

										Use of Drivers by Product
Activity Cost Pools		Cost Drivers		Estimated Overhead			Estimated Use of Cost Drivers			Home		Commercial
Receiving		Pounds		$80,400			335,000			215,000		120,000
Forming		Machine hours		150,850			35,000			27,000		8,000
Assembling		Number of parts		414,470			217,000			165,000		52,000
Testing		Number of tests		52,020			25,500			15,500		10,000
Painting		Gallons		52,580			5,258			3,680		1,578
Packing and shipping		Pounds		827,450			335,000			215,000		120,000
				$1,577,770

(a)

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Your answer is correct.

Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. 12.50.)

		Home Model		Commercial Model
Total unit cost		$enter a dollar amount rounded to 2 decimal places		$enter a dollar amount rounded to 2 decimal places

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(b)

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

Activity Cost Pool		Estimated Overhead		Estimated Use of Cost Drivers				Activity-Based Overhead Rate
Receiving		$enter a dollar amount		enter a number of pounds		Pounds		$enter a dollar amount per pound rounded to 2 decimal places	per pound
Forming		enter a dollar amount		enter a number of pounds		Machine hours		$enter a dollar amount per machine hour rounded to 2 decimal places	per machine hour
Assembling		enter a dollar amount		enter a number of pounds		Parts		$enter a dollar amount per part rounded to 2 decimal places	per part
Testing		enter a dollar amount		enter a number of pounds		Tests		$enter a dollar amount per test rounded to 2 decimal places	per test
Painting		enter a dollar amount		enter a number of pounds		Gallons		$enter a dollar amount per gallon rounded to 2 decimal places	per gallon
Packing and shipping		enter a dollar amount		enter a number of pounds		Pounds		$enter a dollar amount per pound rounded to 2 decimal places	per pound
		$enter a total amount