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Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows: Sandy BeachRocky River Direct materials cost
Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows: Sandy BeachRocky River Direct materials cost per unit$19.30 $27.50 Direct labor cost per unit 14.30 17.50 Sales price per unit 83.60 106.00 Expected production per month 1,170 units 940 units Keller has monthly overhead of $11,290, which is divided into the following cost pools: Setup costs$2,655 Quality control 5,474 Maintenance 3,161 Total$11,290 The company has also compiled the following information about the chosen cost drivers: Sandy BeachRocky RiverTotal Number of setups143145 Number of inspections130315445 Number of machine hours1,4501,4502,900 Required: 1. Assuming an ABC system, assign overhead costs to each product based on activity demands.(Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.) 2. Calculate the production cost per unit for each of Kellers products with an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) 3. Calculate Kellers gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) 4. Compare the gross margin per unit of each product under the traditional system and ABC. (Round your answers to 2 decimal places.)
Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows:
Sandy BeachRocky River
Direct materials cost per unit$19.30 $27.50
Direct labor cost per unit 14.30 17.50
Sales price per unit 83.60 106.00
Expected production per month 1,170 units 940 units
Keller has monthly overhead of $11,290, which is divided into the following cost pools:
Setup costs$2,655
Quality control 5,474
Maintenance 3,161
Total$11,290
The company has also compiled the following information about the chosen cost drivers:
Sandy BeachRocky RiverTotal
Number of setups143145
Number of inspections130315445
Number of machine hours1,4501,4502,900
Required:
1. Assuming an ABC system, assign overhead costs to each product based on activity demands.(Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)
2. Calculate the production cost per unit for each of Kellers products with an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)
3. Calculate Kellers gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)
4. Compare the gross margin per unit of each product under the traditional system and ABC. (Round your answers to 2 decimal places.)
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