Answers
Solution 1:
| Computation of unit cost of each product - Traditional costing -Fire out Inc. | ||
| Particulars | Home | Commercial |
| Direct material | $18.12 | $26.30 |
| Direct labor | $18.40 | $18.40 |
| Manufacturing overhead | $24.00 | $24.00 |
| Unit Product Cost | $60.52 | $68.70 |
Solution 2:
| Determination of activity rate for each activity | ||||
| Activity | Estimated Overhead Cost | Activity Base | Usage of Activity Base | Activity Rate |
| Receiving | $67,200.00 | kilogram | 336000 | $0.20 |
| Forming | $151,200.00 | Machine hours | 36000 | $4.20 |
| Assembling | $392,400.00 | Nos of parts | 218000 | $1.80 |
| Testing | $54,000.00 | Nos of tests | 27000 | $2.00 |
| Painting | $52,800.00 | Litres | 6000 | $8.80 |
| Packing and shipping | $806,400.00 | kilogram | 336000 | $2.40 |
| Total | $1,524,000.00 | |||
Solution 3:
| Allocation of overhead and computation of overhead cost per unit | ||||||||
| Activity | Estimated Overhead Cost | Activity Base | Usage of Activity Base | Activity Rate | Home | Commercial | ||
| Usage | Allocated Costs | Usage | Allocated Costs | |||||
| Receiving | $67,200.00 | kilogram | 336000 | $0.20 | 215000 | $43,000 | 121000 | $24,200 |
| Forming | $151,200.00 | Machine hours | 36000 | $4.20 | 28000 | $117,600 | 8000 | $33,600 |
| Assembling | $392,400.00 | Nos of parts | 218000 | $1.80 | 165000 | $297,000 | 53000 | $95,400 |
| Testing | $54,000.00 | Nos of tests | 27000 | $2.00 | 16000 | $32,000 | 11000 | $22,000 |
| Painting | $52,800.00 | Litres | 6000 | $8.80 | 4000 | $35,200 | 2000 | $17,600 |
| Packing and shipping | $806,400.00 | kilogram | 336000 | $2.40 | 215000 | $516,000 | 121000 | $290,400 |
| Total | $1,524,000.00 | $1,040,800 | $483,200 | |||||
| Nos of units | 54000 | 9500 | ||||||
| Overhead cost per unit | $19.27 | $50.86 | ||||||
Solution 4:
| Computation of unit cost of each product - Activity Based costing - Fire out inc. | ||
| Particulars | Home Fire Extinguisher | Commercial Fire Extinguisher |
| Direct material | $18.12 | $26.30 |
| Direct labor | $18.40 | $18.40 |
| Manufacturing overhead | $19.27 | $50.86 |
| Unit Product Cost | $55.79 | $95.56 |
Solution 5:
| Activity | Value Added / Non Value Added |
| Receiving | Non Value Added |
| Forming | Value Added |
| Assembling | Value Added |
| Testing | Non Value Added |
| Painting | Value Added |
| Packing and shipping | Value Added |
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