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3 Summit Company makes two models of snowboards, the Junior and the Expert. Its basic production information follows: Junlor Expert Direct materials cost per unit
3 Summit Company makes two models of snowboards, the Junior and the Expert. Its basic production information follows: Junlor Expert Direct materials cost per unit Direct labor cost per un Sales price per unit Expected production per month $92 51 390 4,000 units $115 75 615 9,000 units Summit has monthly overhead of $484,746, which is divided into the following cost pools: Setup costs Quality control Maintenance $136,364 163.020 78,840 106,522 $484,746 Total The company has also compiled the following information about the chosen cost drivers: JunlorExpert Total Number of setups required Number of inspections Number of machine hours Number of engineering hours 60 975 350 352 86 675 650 612 146 1,650 1,000 964 Required: 1. Select the appropriate cost driver for cach cost pool and calculate the activity rates if Summit wanted to implement an ABC system. 2. Assuming an ABC system, assign overhead costs to cach product based on activity demands. 3. Calculate the production cost per unit for cach of Summit's products with an ABC system 4. Calculate Summit's gross margin per unit for cach product under an ABC system
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