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Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Setup costs Quality control Maintenance Total Direct materials
Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Setup costs Quality control Maintenance Total Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Harbour has monthly overhead of $201,665, which is divided into the following activity pools: $ 79,200 60,465 62,000 $ 201,665 Number of setups Number of inspections Number of machine hours Home $39 18 358 750 units Home 38 310 1,300 The company also has compiled the following information about the chosen cost drivers: Work 61 385 1,800 Work $69 38 576 410 units Total 99 695 3,100 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. 2. Calculate the production cost per unit for each of Harbour's products under a traditional costing system. 3. Calculate Harbour's gross margin per unit for each product under the traditional costing system. 4. Select the appropriate cost driver for each activity pool and calculate the activity rates if Harbour wanted to implement an ABC system.
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