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

	Home			Work
Direct materials cost per unit	$	35		$	72
Direct labor cost per unit		22			36
Sales price per unit		356			579
Expected production per month		790	units		440	units

Harbour has monthly overhead of $181,540, which is divided into the following cost pools:

Setup costs

$

84,700

Quality control

51,840

Maintenance

45,000

Total

$

181,540

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

	Home	Work	Total
Number of setups	38	72	110
Number of inspections	320	320	640
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.)

	Overhead Assigned
Home Model:
Work Model:
Total Overhead Cost	$0

2.	Calculate the production cost per unit for each of Harbours products under a traditional costing system.

	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.)

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.)

	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.

	Home	Work
Gross Margin

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	$0	$0

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.

	Home	Work
Gross Margin

8.

Compare the gross margin of each product under the traditional system and ABC.

	Home	Work
Gross Margin (Traditional)
Gross Margin (ABC)