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Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Home Work Direct materials cost per unit $

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

Home Work
Direct materials cost per unit $ 43 $ 66
Direct labor cost per unit 15 32
Sales price per unit 355 574
Expected production per month 740 units 370 units

Harbour has monthly overhead of $190,460, which is divided into the following cost pools:

Setup costs $ 76,760
Quality control 56,700
Maintenance 57,000
Total $ 190,460

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

Home Work Total
Number of setups 38 63 101
Number of inspections 320 380 700
Number of machine hours 1,100 1,900 3,000

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.)

Home Model: 00
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.)

00 Home Work
Unit Cost

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.)

00 Home Work
Unit Cost

4. Select the appropriate cost driver for each cost pool and calculate the activity rates if Harbour wanted to implement an ABC system.

Setupcost -- ---
Quality Control
Maintenance

5. Assuming an ABC system, assign overhead costs to each product based on activity demands.

Set Cost --- ---
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.)

Home Work
Unit Cost

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.)

8. Compare the gross margin of each product under the traditional system and ABC. (Round your answers to 2 decimal places.)

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