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 (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)]. Expected annual manufacturing overhead is
$1,542,500. Thus, the predetermined overhead rate is $16.02 or
($1,542,500 ÷ 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 |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
Activity Cost Pools |
Cost Drivers |
Estimated Overhead |
Expected Use of |
Home |
Commercial |
|||||
Receiving | Pounds |
$80,000 |
335,000 |
215,000 |
120,000 |
|||||
Forming | Machine hours |
145,000 |
35,000 |
27,000 |
8,000 |
|||||
Assembling | Number of parts |
400,000 |
217,000 |
165,000 |
52,000 |
|||||
Testing | Number of tests |
45,000 |
25,500 |
15,500 |
10,000 |
|||||
Painting | Gallons |
52,500 |
5,258 |
3,680 |
1,578 |
|||||
Packing and shipping | Pounds |
820,000 |
335,000 |
215,000 |
120,000 |
|||||
$1,542,500 |
|
Prepare a 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.
12.25 and cost assigned to 0 decimal places, e.g.
2,500.)
Home Model |
Commercial Model |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Activity Cost Pool |
Expected Use of |
Activity-Based |
Cost Assigned |
Expected Use of |
Activity-Based |
Cost Assigned |
||||||
Receiving |
enter an amount of pounds |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 0 decimal places |
enter an amount of pounds |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 0 decimal places |
||||||
Forming |
enter a number of machine hours |
$enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 0 decimal places |
enter a number of machine hours |
$enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 0 decimal places |
||||||
Assembling |
enter a number of parts |
$enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 0 decimal places |
enter a number of parts |
$enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 0 decimal places |
||||||
Testing |
enter a number of tests |
$enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 0 decimal places |
enter a number of tests |
$enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 0 decimal places |
||||||
Painting |
enter an amount of gallons |
$enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 0 decimal places |
enter an amount of gallons |
$enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 0 decimal places |
||||||
Packing and shipping |
enter an amount of pounds |
$enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 0 decimal places |
enter an amount of pounds |
$enter a dollar amount rounded to 2 decimal places |
enter a dollar amount rounded to 0 decimal places | ||||||
Total costs assigned (a) |
$enter a total amount |
$enter a total amount |
||||||||||
Units produced (b) | enter a number of units | enter a number of units | ||||||||||
Overhead cost per unit [(a) ÷ (b)] |
$enter a dollar amount rounded to 2 decimal places |
$enter a dollar amount rounded to 2 decimal places |
Home | Commercial | ||||||||||||||
Activity Cost Pool | Expected Use of | Activity-Based | Expected Use of | Activity-Based | |||||||||||
Drivers | Overhead Rates | Cost Assigned | Drivers | Overhead Rates | Cost Assigned | ||||||||||
Receiving | 215000 | $ 0.24 | $ 51,600 | 120000 | $ 0.24 | $ 28,800 | |||||||||
Forming | 27000 | $ 4.14 | $ 111,780 | 8000 | $ 4.14 | $ 33,120 | |||||||||
Assembling | 165000 | $ 1.84 | $ 303,600 | 52000 | $ 1.84 | $ 95,680 | |||||||||
Testing | 15500 | $ 1.76 | $ 27,280 | 10000 | $ 1.76 | $ 17,600 | |||||||||
Painting | 3680 | $ 9.98 | $ 36,726 | 1578 | $ 9.98 | $ 15,748 | |||||||||
Packing and shipping | 215000 | $ 2.45 | $ 526,750 | 120000 | $ 2.45 | $ 294,000 | |||||||||
Total costs assigned (a) | $ 1,057,736 | $ 484,948 | |||||||||||||
Units produced (b) | 54000 | 10200 | |||||||||||||
Overhead cost per unit [(a) ÷ (b)] | $ 19.59 | $ 47.54 |
Workings:
Computation of rates:
Activity Cost Pool | Costs | Drivers volume | Rates | ||
Receiving | $ 80,000.00 | 335000 | $ 0.24 | ||
Forming | $ 145,000.00 | 35000 | $ 4.14 | ||
Assembling | $ 400,000.00 | 217000 | $ 1.84 | ||
Testing | $ 45,000.00 | 25500 | $ 1.76 | ||
Painting | $ 52,500.00 | 5258 | $ 9.98 | ||
Packing and shipping | $ 820,000.00 | 335000 | $ 2.45 | ||
$ 1,542,500.00 |
Note: There might be some differences in the answer because of decimals. I've rounded off the decimals as per the questions instruction.
Combat Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a...
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 (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...
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 (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...
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 (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...
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 (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...
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 (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...
7 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 (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,...
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 mode is a high-volume (54,000 units), ha 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 P Both products require 1.5 hours of direct labor for completion. Therefore,...
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 (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,...
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 (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...
Problem 17-IA 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 (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....