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PA4-4 (Static) Selecting Cost Drivers, Assigning Costs Using Activity Rates [LO 4-1, 4-3, 4-4, 4-6] Keller Company makes two models of battery-operated boats, the Sandy
PA4-4 (Static) Selecting Cost Drivers, Assigning Costs Using Activity Rates [LO 4-1, 4-3, 4-4, 4-6] Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows: Sandy Beach Rocky River $ 20 $ 28 19 Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month 70 90 1,200 units 960 units Keller has monthly overhead of $22,360, which is divided into the following cost pools: Setup costs Quality control Maintenance Total $ 5,200 11,000 6,160 $ 22,360 The company has also compiled the following information about the chosen cost drivers: Sandy Beach 14 Number of setups Number of inspections Number of machine hours Rocky River 26 300 1,400 Total 40 440 2,800 140 1,400 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 $ 0 $ 0 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 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)
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