Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows: Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Sandy Beach $18.40 13.90 84.00 1,230 units Rocky River $ 27.10 17.90 106.00 950 units Keller has monthly overhead of $12,460, which is divided into the following cost pools: Setup costs Quality control Maintenance Total $ 2,790 6,580 3,090 $ 12,460 The company has also compiled the following information about the chosen cost drivers: Sandy Beach Number of setups Number of inspections Number of machine hours 180 Rocky River Total 2945 355535 1,580 3,000 1,500 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 Keller's 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 Keller's 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 Keller's products with an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) Sandy Beach Rocky River Unit Cost 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.) 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)
