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 1/2 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 Af— (54,000 + 10,200)]. Expected annual manufacturing overhead is $1,493,400. Thus, the predetermined overhead rate is $15.51 or ($1,493,400 Af· 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 |
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| Home | Commercial | ||||||||||
| Receiving | Pounds | $70,600 | 335,000 | 215,000 | 120,000 | ||||||
| Forming | Machine hours | 146,700 | 35,000 | 27,000 | 8,000 | ||||||
| Assembling | Number of parts | 391,000 | 217,000 | 165,000 | 52,000 | ||||||
| Testing | Number of tests | 46,900 | 25,500 | 15,500 | 10,000 | ||||||
| Painting | Gallons | 51,100 | 5,258 | 3,680 | 1,578 | ||||||
| Packing and shipping | Pounds |
787,100 |
335,000 | 215,000 | 120,000 | ||||||
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$1,493,400 Under traditional product costing, compute the total unit cost of both products. (Round your answers to 2 decimal places, e.g. 20.25.) |
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