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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 Beach Rocky River Direct materials
Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows: Sandy Beach Rocky River Direct materials cost per unit $19.90 $ 28.10 Direct labor cost per unit 14.60 18.70 Sales price per unit 83.90 106.00 Expected production per month 1,240 units 970 units Keller has monthly overhead of $12,056, which is divided into the following cost pools: Setup costs Quality control Maintenance Total $ 2,320 6,088 3,648 $ 12,056 The company has also compiled the following information about the chosen cost drivers: Number of setups Number of inspections Number of machine hours Sandy Beach Rocky River 19 21 295 1,600 1,600 200 Total 40 495 3,200 7. Calculate Keller's gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) Rocky River Sandy Beach $ 45.06 Gross Margin 8. Compare the gross margin per unit of each product under the traditional system and ABC. (Round your answers to 2 decimal places.) Rocky River Gross Margin (Traditional) Gross Margin (ABC) Sandy Beach $ 44.54 $ 45.06
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