Problem 17-1A Combat Fire, Inc. manufactures steel cylinders and nozzles for two

Question

Problem 17-1A Combat Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguishen 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 x (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 Drivers by Product Expected Use of Cost Drivers Estimated Overhead Activity Cost Pools Receiving Forming Assembling Testing Painting Packing and shipping Cost Drivers Pounds Machine hours Number of parts Number of tests Gallons Pounds Commercial 120,000 8,000 52,000 10,000 1,578 120,000 Home $80,000 145,000 400,000 45,000 52,500 820,000 $1,542,500 335,000 215,000 27,000 217,000 165,000 15,500 3,680 335,000 215,000 35,000 25,500 5,258 Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. 12.25.) Home Model Commercial Model Total unit cost

Explanation / Answer

                                      93.03

Total Unit Cost under Traditional Costing Home Model Commercial Model Units produced        54,000.00                   10,200.00 Direct Material per Unit                18.50                           26.50 Direct Labour                19.00                           19.00 Manufacturing OH per Unit(16.02x1.5)                24.03                           24.03 Total Unit Cost                61.53                           69.53

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