Question

Aa v Heading 4 Heading 3 Heading 2 Heading 1 No Spacing Normal Problem 17-1A (25 POINTS) 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 half- gallon cylinder and 54,000 units will be produced. T cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI and 10,200 units will be produced The commercial model is a low-volume two-gallon The company's managers identified si activity cost pools and related cost drivers and accumulated overhead by cost pool as follows: Expected Use of Cost Drivers by Product Home Commercial Estimated Overhea $85,500 Cost Drivers Pounds Machine hours 153,000 Number of parts 410,000 Number of tests 45,000 Gallons Pounds Activity Cost 215,000 120,000 27.000 8,000 165,00052,000 15,500 10,000 Receiving Forming Testing Painting Packing & Shipping 1,578 215,000 120,000 3,680 53,900 820,000 $1,567,400 Prepare and complete the schedule showing the computations of the activity-based overhead rates (per cost driver). (Round overhead rate to 2 decimal places, e.g. 12.25) A. Activity-Based Overhead Rate Expected Use of Cost Drivers Estimated Overhead Activity Cost Pool AaBbCcDdE Heading 4 No Spacing Headng1 Heading 2 Heading 3 Normal B. Prepare and complete the schedule assigning each activity's overhead cost pool to each product based on the use of cost drivers. (Round overhead cost per unit to 2 decimal places, e.g 1225 and cost assigned to 0 decimal places, e.g. 2,500.) HOME MODEL Activity-Based Overhead Rate Cost Assigned Expected Use of Cost Drivers Activity Cost Pool Total costs assigned 82 COMMERCIAL MODEL Expected Activity Cost Pool Activity-Based Cost Assigned Use of Cost Overhead Rate Drivers Total costs assigned Engish (United States) No Spacing Heading 1 Heading 2 Heading 3 Heading Normal c Compute the total overhead cost per unit for each product under ABC (Round answer to 2 decimal places, e.g. 12.25.) D. Classify each of the following activities as a value-added activity or a non-value-added activity Assembling, Testing, Painting, and Packing and shipping Activities are: Receiving, Engish (United States)

Answer 1

Solution Expected use of Cost Drivers Estimated Overhead Activity cost pool Overhead Rate Receivin Formin Assemblin Testin Paintin Packaging & Shippin 85,500 153,000 410,000 45,000 3,900 820,000 335,000 35,000 217,000 25,500 5,258 335,000 0.26 4.37 1.89 1.76 10.25 2.45 Requirement B: Assigning each activity's overhead cost pool to each product based on use HOME MODEL Expected use of Cost Drivers Cost assigned Activity cost pool Overhead Rate Receivin Formin Assemblin Testin Painting Packaging & Shippin Total cost a 215,000 27,000 165,000 15,500 3,680 215,000 0.26 4.37 1.89 1.76 10.25 2.45 5,900 117,990 $311,850 27,280 37,720 $526,750 490 COMMERCIAL MODEL Expected use of Cost Drivers Cost assigned Activity cost pool Overhead Rate Receivin Formin Assemblin Testin Painting Packaging & Shippin Total cost assigned 120,000 8,000 52,000 10,000 1,578 120,000 0.26 4.37 1.89 1.76 10.25 2.45 $34,960 98,280 17,600 16.175 294,000 492,215

Home Model Commercial Model Total overhead cost assigned Total no. of units Total overhead cost per unit $1,077,490 54000 19.95 $492,215 10200 26 Requirement D Classify each of the following activities as a value-added activity or a non- Classification Non-value added Value added Value added Value added Value added Value added Receivin Formin Assemblin Testin Painting Packaging & Shipping