Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows:

	Home			Work
Direct materials cost per unit	$	39		$	62
Direct labor cost per unit		18			32
Sales price per unit		364			571
Expected production per month		640	units		370	units

Harbour has monthly overhead of $198,050, which is divided into the following cost pools:

Setup costs	$	80,510
Quality control		66,240
Maintenance		51,300
Total	$	198,050

The company has also compiled the following information about the chosen cost drivers:

	Home	Work	Total
Number of setups	35	62	97
Number of inspections	330	360	690
Number of machine hours	1,400	1,300	2,700

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 Harbours products under a traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.)

Unit Cost

Home / ____

Work / ____

3. Calculate Harbours gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Gross Margin

Home / ____

Work / ____

4. Select the appropriate cost driver (inspections, machine hours, setups) 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 Harbours products in an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)

Unit Cost

Home / ____

Work / ____

7. Calculate Harbours gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)

Gross Margin

Home / ____

Work / ____

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) / ____ / ____