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. Activity Cost Pools Receiving Forming Assembling Testing Painting Packing and shipping Cost Drivers Pounds Machine hours Number of parts Number of tests Gallons Pounds Estimated Overhead $87,100 150,150 399,280 47,940 57,838 830,800 $1,573,108 Estimated Use of Cost Drivers 335.000 35,000 217,000 25.500 5,258 335.000 Use of Drivers by Product Home 215,000 27,000 165,000 15,500 3,680 215,000 Commercial 120,000 8,000 52,000 10,000 1.578 120,000 9:26 PM 4.) Compute the total cost per unit for each product under ABC. (Round your answers to 2 decima 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
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. Activity Cost Pools Receiving Forming Assembling Testing Painting Packing and shipping Cost Drivers Pounds Machine hours Number of parts Number of tests Gallons Pounds Estimated Overhead $87,100 150,150 399,280 47,940 57,838 830,800 $1,573,108 Estimated Use of Cost Drivers 335.000 35,000 217,000 25.500 5,258 335.000 Use of Drivers by Product Home 215,000 27,000 165,000 15,500 3,680 215,000 Commercial 120,000 8,000 52,000 10,000 1.578 120,000 9:26 PM 4.) Compute the total cost per unit for each product under ABC. (Round your answers to 2 decima 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
Activity Cost Pools
Receiving
Forming
Assembling
Testing
Painting
Packing and shipping
Cost Drivers
Pounds
Machine hours
Number of parts
Number of tests
Gallons
Pounds
Estimated Overhead
$87,100
150,150
399,280
47,940
57,838
830,800
$1,573,108
Estimated Use of
Cost Drivers
335.000
35,000
217,000
25,500
5,258
335.000
Use of
Drivers by Product
Home
215,000
27,000
165,000
15.500
3,680
215,000
Commercial
120,000
8,000
52,000
10,000
1,578
120,000
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-added value-added
Assembling value-addednon-value-added
Testing value-addednon-value-added
Painting non-value-added value-added
Packing and shipping value-addednon-value-added](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F20b6714b-86ad-4cdb-b4bf-11f3214fd0a3%2Fbb5e3204-1fd6-4893-b8a7-3b1ba8e2e69f%2Fbs5vvgo_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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.
Activity Cost Pools
Receiving
Forming
Assembling
Testing
Painting
Packing and shipping
Cost Drivers
Pounds
Machine hours
Number of parts
Number of tests
Gallons
Pounds
Estimated Overhead
$87,100
150,150
399,280
47,940
57,838
830,800
$1,573,108
Estimated Use of
Cost Drivers
335.000
35,000
217,000
25,500
5,258
335.000
Use of
Drivers by Product
Home
215,000
27,000
165,000
15.500
3,680
215,000
Commercial
120,000
8,000
52,000
10,000
1,578
120,000
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-added value-added
Assembling value-addednon-value-added
Testing value-addednon-value-added
Painting non-value-added value-added
Packing and shipping value-addednon-value-added
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