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Summit Company makes two models of snowboards, the Junior and the Expert. Its basic production information follows: Junior Expert Direct materials cost per unit $ 92 $ 115 Direct labor cost per unit 51 75 Sales price per unit 390 615 Expected production per month (in units) 4,000 9,000 Summit has monthly overhead of $484,746, which is divided into the following cost pools: Setup costs $ 136,364 Quality control 163,020 Maintenance 78,840 Engineering 106,522 Total 484,746 The company has also compiled the following information about the chosen cost drivers: Junior Expert Total Number of setups required 60 86 146 Number of inspections 975 675 1,650 Number of machine hours 350 650 1,000 Number of engineering hours 352 612 964 Required: 1 Suppose Summit used 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 Summit's products under a traditional costing system. 3 Calculate Summit's gross margin per unit for each product under the traditional costing system. 4 Select the appropriate cost driver for each cost pool and calculate the activity rates if Summit wanted to implement an ABC system. 5 Assuming an ABC system, assign overhead costs to each product based on activity demands. 6 Calculate the production cost per unit for each of Summit's products with an ABC system. 7 Calculate Summit's gross margin per unit for each product under an ABC system. 8 Compute the gross margin of each product under the traditional system and ABC.

Summit Company makes two models of snowboards, the Junior and the Expert. Its basic production information follows unior Direct materials cost per unit Direct labor cost per unit Sales price per unit 115 75 615 51 390 Expected production per month (in units 4,000 9,000 Summit has monthly overhead of $484,746, which is divided into the following cost pools: Setup costs Quality control Maintenance Engineerin $ 136,364 163,020 78,840 106,522 484,746 Total The company has also compiled the following information about the chosen cost drivers: unior Total Number of setups required Number of inspections Number of machine hours Number of engineering hours 60 975 350 352 86 675 650 612 146 1,000 964 Required: 1 Suppose Summit used 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 Summit's products under a traditional costing system. 3 Calculate Summit's gross margin per unit for each product under the traditional costing systenm 4 Select the appropriate cost driver for each cost pool and calculate the activity rates if Summit wanted to implement an ABC system. 5 Assuming an ABC system, assign overhead costs to each product based on activity demands. 6 Calculate the production cost per unit for each of Summit's products with an ABC system. 7 Calculate Summit's gross margin per unit for each product under an ABC system. 8 Compute the gross margin of each product under the traditional system and ABC