2. Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River Basic production information follows: Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Sandy Beach $19.60 13.50 84.00 1,170 units Rocky River $ 27.30 18.70 105.00 970 units Keller has monthly overhead of $11,860, which is divided into the following cost pools 5 2,440 5.580 Setup costs Quality control Maintenance Total 5 11,860 The company has also compiled the following information about the chosen cost drivers Total 40 Number of setups Number of inspections Number of machine hours Sandy Beach Rocky River 17 23 325 1,600 140 Required: 1. Suppose Keller uses a traditional costing system with machine hours as the cost driver Determine the amount of overhead assigned to each product line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) Answer is complete and correct. Sandy Beach Model Rocky River Model Total Overhead Cost Overhead Assigned 5930 $ 5,930 $ 11.860 OB 2. Calculate the production cost per unit for each of Keller's products under a traditional costing system (Round your intermediate calculations and final answers to 2 decimal places.) Answer is complete but not entirely correct. Sandy Beach Rocky River 5.07 Unit Cost 6.11 3. Calculate Keller's gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Answer is complete but not entirely correct. Sandy Beach Rocky River Gross Margin S 78 935 98 89 4. Select the appropriate cost driver for each cost pool and calculate the activity rates if Keller wanted to implement an ABC system (Round your answers to 2 decimal places.) Answer is complete and correct. $ Setup Costs Quality Control Maintenance Setups Inspections Machine Hours 61.00 12.00 120 OS 5. Assuming an ABC system, assign overhead costs to each product based on activity demands (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) Setup Cost Quality Control Maintenance Total Overhead Cost Answer is complete and correct. Overhead Assigned Overhead Assigned To Sandy Beach To Rocky River s 1,037 $ 1.403 $ 1,680S 3,900 $ 1.920 S 1920 $ 4,637 IS 7.223 2 6. Calculate the production cost per unit for each of Keller's products with an ABC system (Round your intermediate calculations and final answers to 2 decimal places.) Answer is complete but not entirely correct. Sandy Beach Rocky River Unit Cost 3.963 7.45 7. Calculate Keller's gross margin per unit for each product under an ABC system (Round your intermediate calculations and final answers to 2 decimal places.) Answer is complete but not entirely correct. Sandy Beach Rocky River 5 30.045 9755 Gross Margin 8. Compare the gross margin per unit of each product under the traditional system and ABC. (Round your answers to 2 decimal places.) Answer is complete but not entirely correct. S Sandy Beach Rocky River 78.935 98.89 $ 80 04 97 55 Gross Margin (Traditional) Gross Margin (ABC)
