Waterway Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a...
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Waterway 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 x (54,000+10,200)]. Estimated annual manufacturing overhead is $1,573,108. Thus, the predetermined overhead rate is $16.34 or ($1,573,108 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 Receiving Cost Drivers Estimated Overhead Estimated Use of Cost Drivers Home Commercial Pounds $87,100 335,000 215,000 120,000 Forming Machine hours 150,150 35,000 27,000 8,000 Assembling Number of parts 399,280 217,000 165,000 52,000 Testing Number of tests 47,940 25,500 15,500 10,000 Painting Gallons 57,838 5,258 3,680 1,578 Packing and shipping Pounds 830,800 335,000 215,000 120,000 $1,573,108 9:26 PM 4.) Compute the total cost per unit for each product under ABC. (Round your answers to 2 decimal places, e.g. 12.25.) Home Model $ Commercial Model $ 5.)Classify each of the activities as a value-added activity or a non-value-added activity. Activity Receiving value-addednon-value-added Forming non-value-addedvalue-added Assembling value-addednon-value-added Testing value-addednon-value-added Painting non-value-addedvalue-added Packing and shipping value-addednon-value-added Waterway 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 x (54,000+10,200)]. Estimated annual manufacturing overhead is $1,573,108. Thus, the predetermined overhead rate is $16.34 or ($1,573,108 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 Receiving Cost Drivers Estimated Overhead Estimated Use of Cost Drivers Home Commercial Pounds $87,100 335,000 215,000 120,000 Forming Machine hours 150,150 35,000 27,000 8,000 Assembling Number of parts 399,280 217,000 165,000 52,000 Testing Number of tests 47,940 25,500 15,500 10,000 Painting Gallons 57,838 5,258 3,680 1,578 Packing and shipping Pounds 830,800 335,000 215,000 120,000 $1,573,108 9:26 PM 4.) Compute the total cost per unit for each product under ABC. (Round your answers to 2 decimal places, e.g. 12.25.) Home Model $ Commercial Model $ 5.)Classify each of the activities as a value-added activity or a non-value-added activity. Activity Receiving value-addednon-value-added Forming non-value-addedvalue-added Assembling value-addednon-value-added Testing value-addednon-value-added Painting non-value-addedvalue-added Packing and shipping value-addednon-value-added
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Managerial Accounting Tools for Business Decision Making
ISBN: 978-1119036432
7th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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