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Atlanta Systems produces two different products, Product A, which sells for $1,150 per unit, and Product B, which sells for $2,200 per unit, using three
Atlanta Systems produces two different products, Product A, which sells for $1,150 per unit, and Product B, which sells for $2,200 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver, and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Design (Engineering Hours) Machining (Machine Hours) Inspection (Batches) Cost $ 330,000 $4,600,000 $ 440,000 Usage by Product A 136 2,720 14 Usage by Product B 114 2,280 66 Atlanta manufactures 12,740 units of Product A and 10,070 units of Product B per month. Each unit of Product A uses $100 of direct materials and $45 of direct labor, while each unit of Product Buses $140 of direct materials and $75 of direct labor. Required: a. Calculate the activity rate for design. Rate for Design per hour b. Calculate the activity rate for machining. Rate for Machining per hour c. Calculate the activity rate for inspection. Rate for Inspection per batch d. Determine the indirect costs assigned to Product A. Indirect Costs e. Determine the indirect costs assigned to Product B. Indirect Costs f. Determine the manufacturing cost per unit for Product A. (Round your answer to the nearest whole dollars.) Manufacturing Cost per unit g. Determine the manufacturing cost per unit for Product B. (Round your answer to the nearest whole dollars.) Manufacturing Cost per unit h. Determine the gross profit per unit for Product A. (Round your intermediate calculations and final answer to the nearest whole dollars.) Gross Profit per unit i. Determine the gross profit per unit for Product B. (Round your intermediate calculations and final answer to the nearest whole dollars.) Gross Profit per unit Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Home Work $ 45 $ 66 22 37 364 585 780 units 490 units Harbour has monthly overhead of $185,620, which is divided into the following cost pools: Setup costs Quality control Maintenance Total $ 81,120 59,500 45,000 $185,620 The company has also compiled the following information about the chosen cost drivers: Number of setups Number of inspections Number of machine hours Home 43 340 1,500 Work 61 360 1,000 Total 104 700 2,500 Required: 1. Suppose Harbour 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.) Overhead Assigned Home Model: Work Model: Total Overhead Cost 2. Calculate the production cost per unit for each of Harbour's products under a traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Unit Cost 3. Calculate Harbour's gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Gross Margin 4. Select the appropriate cost driver for each cost pool and calculate the activity rates if Harbour wanted to implement an ABC system. Setup Costs Quality Control Maintenance 5. Assuming an ABC system, assign overhead costs to each product based on activity demands. Overhead Assigned To Home Overhead Assigned To Work Setup Costs Quality Control Maintenance Total Overhead Cost 6. Calculate the production cost per unit for each of Harbour's products in an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Unit Cost 7. Calculate Harbour's gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Gross Margin 8. Compare the gross margin of each product under the traditional system and ABC. (Round your answers to 2 decimal places.) Home Work Gross Margin (Traditional) Gross Margin (ABC)
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