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	$	19.70		$	27.10
Direct labor cost per unit		13.70			17.90
Sales price per unit		82.30			105.00
Expected production per month		1,250	units		980	units

Keller has monthly overhead of $10,424, which is divided into the following cost pools:

Setup costs	$	2,240
Quality control		5,324
Maintenance		2,860
Total	$	10,424

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

	Sand Beach	Rocky River	Total
Number of setups	15	20	35
Number of inspections	150	290	440
Number of machine hours	1,300	1,300	2,600

Required: 1. Suppose Keller 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 and round your final answers to the nearest whole dollar amount.)

	Overhead Assigned
Sandy Beach Model
Rocky River Model
Total Overhead Cost

2. Calculate the production cost per unit for each of Kellers products under a traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.)

	Sandy Beach	Rocky River
Unit Cost

3. Calculate Kellers gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.)

	Sandy Beach	Rocky River
Gross Margin

4. Select the appropriate cost driver for each cost pool and calculate the activity rates if Keller wanted to implement an ABC system. (Round your answers to 2 decimal places.)

Setup Costs
Quality Control
Maintenance

5. 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.)

	Overhead Assigned to Sandy Beach	Overhead Assigned to Rocky River
Setup Cost
Quality Control
Maintenance
Total Overhead Cost

6. 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.)

	Sandy Beach	Rocky River
Unit Cost

7. Calculate Kellers gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)

	Sandy Beach	Rocky River
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.)

	Sandy Beach	Rocky River
Gross Margin(traditional)
Gross Margin(ABC)