PA4-3 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
Direct materials cost per unit	$	30		$	48
Direct labor cost per unit		20			30
Sales price per unit		300			500
Expected production per month		700	units		400	units

Harbour has monthly overhead of $175,200, which is divided into the following cost pools:

Setup costs	$	68,800
Quality control		58,400
Maintenance		48,000
Total	$	175,200

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

	Home	Work	Total
Number of setups	42	58	100
Number of inspections	340	390	730
Number of machine hours	1,700	1,300	3,000

8. Compare the gross margin of each product (HOME, WORK) under the traditional system and ABC. (Round your answers to 2 decimal places.)