PA4-3 (Algo) Selecting Cost Drivers, Assigning Costs Using Activity Rates (LO 4-1, 4-3, 4-4, 4-6 ] Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Home Work $ 43 $ 64 20 352 571 610 units 300 units 610 Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month 35 Harbour has monthly overhead of $174,875, which is divided into the following cost pools: Setup costs Quality control Maintenance Total $ 82,620 53,055 39,200 $ 174,875 The company has also compiled the following information about the chosen cost drivers: Home Work Number of setups 4161 Number of inspections 330 325 Number of machine hours 1,200 1,600 Total 102 655 2,800 Required: 1. Suppose Harbour 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.) Answer is complete and correct. Home Model: Work Model: Overhead Assigned 74,952 99,936 174,888 Total Overhead Cost 2. Calculate the production cost per unit for each of Harbour's products under a traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Answer is complete but not entirely correct. Home 185.87 Work 333.12 X Unit Cost $ $ 3. Calculate Harbour's gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Answer is complete but not entirely correct. Home 166.13 Work 237.88 X Gross Margin $ $ 4. Select the appropriate cost driver for each cost pool and calculate the activity rates if Harbour wanted to implement an ABC system. Answer is complete and correct. $ 810 Setup Costs Quality Control Setups Inspections Machine Hours $ 81 Maintenance $ 14 5. Assuming an ABC system, assign overhead costs to each product based on activity demands. Answer is complete and correct. Setup Costs Quality Control Maintenance Total Overhead Cost Overhead Assigned To Home 33,210 26,730 16,800 $ 76,740 Overhead Assigned To Work $ 49,410 $ 26,325 $ 22,400 $ 98,135 6. Calculate the production cost per unit for each of Harbour's products in an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) Answer is complete and correct. Home 188.80 Work 426.12 Unit Cost $ $ 7. Calculate Harbour's gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.) Answer is complete and correct. Home $ 163.20 Work 144.88 Gross Margin $ 8. Compare the gross margin of each product under the traditional system and ABC. (Round your answers to 2 decimal places.) X Answer is complete but not entirely correct. Home Work Gross Margin (Traditional) $ 166.13 $ 237.88 X Gross Margin (ABC) $ 163.20 $ 144.88
