Question

Question 4 of 4 -/3 Bramble, 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 $1,582,128. Thus, the predetermined overhead rate is $16.43 or ($1,582,128 + 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 Estimated Use of Drivers by Product Activity Cost Pools Cost Drivers Receiving Pounds Forming Machine hours Assembling Number of parts Testing Number of tests Painting Gallons Packing and shipping Pounds Estimated Overhead $90,450 154,000 410,130 48.960 57,838 820.750 $1,582,128 Estimated Use of Cost Drivers 335,000 35,000 217.000 25,500 5,258 335,000 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

Answer 1

a
	Home Model	Commercial Model
Total unit cost	62.15	70.15

Workings:
Home Model:
Direct materials	18.50
Direct labor	19.00
Overhead	24.65	=16.43*1.5
Total unit cost	62.15
Commercial Model:
Direct materials	26.50
Direct labor	19.00
Overhead	24.65	=16.43*1.5
Total unit cost	70.15