PA4-3 (Static) 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: Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Home Work $ 30 $ 48 20 30 500 700 units 400 units 300 Harbour has monthly overhead of $175,200, which is divided into the following cost pools: Setup costs Quality control Maintenance Total $ 68,800 58,400 48,000 $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 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 not complete. Overhead Assigned Home Model Work Model: Total Overhead Cost $ 0 2. Calculate the production cost per unit for each of Harbour's products under & traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Answer is not complete. Home Work Unit Cost 3. Calculate Harbour's gross margin per unit for each product under the tradition costing system (Round your intermediate calculations and final answers to 2 decimal places.) Answer is complete and correct. Home Work Gross Margin $ 108.17 232.20 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 but not entirely correct. Setup Costs Quality Control Maintenance Setups Machine Hours Inspections $ s $ 688 80 16 5. Assuming an ABC system, assign overhead costs to each product based on activity demands. Answer is not complete. Overhead Assigned Overhead Assigned To Home To Work Setup Costs Quality Control Maintenance Total Overhead Cost $ 0 $ 0 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.) Home Work 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.) Home Work Gross Margin 8. Compare the gross margin of each product under the traditional system and ABC. (Round your answers to 2 decimal places.) Home Work Gross Margin (Traditional) Gross Margin (ABC)
