Concord 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 $1,588,566. Thus, the predetermined overhead rate is $16.50 or ($1,588,566 +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 Pools Receiving Pounds Forming Machine hours Assembling Number of parts Testing Number of tests Painting Gallons Packing and shipping Pounds (a) Cost Drivers Your Answer Correct Answer Your answer is incorrect. Total unit cost $ Estimated Overhead Home Model $87,100 155.050 412,300 46,920 63,096 824,100 $1.588,566 $ Estimated Use of Cost Drivers 335.000 35,000 217,000 25,500 5,258 335,000 Commercial Model Use of Drivers by Product Home 215,000 27,000 165,000 15,500 3,680 215,000 Commercial 120,000 Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. 12.50.) 8.000 52,000 10,000 1,578 120.000
Concord 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 $1,588,566. Thus, the predetermined overhead rate is $16.50 or ($1,588,566 +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 Pools Receiving Pounds Forming Machine hours Assembling Number of parts Testing Number of tests Painting Gallons Packing and shipping Pounds (a) Cost Drivers Your Answer Correct Answer Your answer is incorrect. Total unit cost $ Estimated Overhead Home Model $87,100 155.050 412,300 46,920 63,096 824,100 $1.588,566 $ Estimated Use of Cost Drivers 335.000 35,000 217,000 25,500 5,258 335,000 Commercial Model Use of Drivers by Product Home 215,000 27,000 165,000 15,500 3,680 215,000 Commercial 120,000 Under traditional product costing, compute the total unit cost of each product. (Round answers to 2 decimal places, e.g. 12.50.) 8.000 52,000 10,000 1,578 120.000
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.1SC: Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing...
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