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.
2. Calculate the production cost per unit for each of Keller's products under a traditional costing system.
3. Calculate Keller's gross margin per unit for each product under the traditional costing system.
4. Select the appropriate cost driver for each activity pool and calculate the activity rates if Keller wanted to implement an ABC system.
5. Assuming an ABC system, assign overhead costs to each product based on activity demands.
6. Calculate the production cost per unit for each of Keller's products with an ABC system.
7. Calculate Keller's gross margin per unit for each product under an ABC system.
8. Compare the gross margi of each product under the traditional system and ABC.

Keller Company makes two models of batteryoperated boats, the Sandy Beach and the Rocky River. Basic production information follows: Sandy Beach Rocky River Direct materials cost per unit $ 18.40 $ 26.80 Direct labor cost per unit 14.10 17.20 Sales price per unit 83.20 105.00 Expected production per month 1,150 units 960 units Keller has monthly overhead of $11,392, which is divided into the following activity pools: Setup costs $ 2,135 Quality control 6,458 Maintenance 2,800 Total $ 11,392 The company also has compiled the following information about the chosen cost drivers: Sandy Rocky Beach River Total Number of setups 16 19 35 Number of inspections 120 405 525 Number of machine hours 1,400 1,400 2,800 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Suppose Keller uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line. Note: Do not round intermediate calculations and round your nal answers to the nearest whole dollar amount. Sandy Beach Model _ Rocky River Model _ Total Overhead Cost _ Required 2 > Required 1 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Calculate the production cost per unit for each of Keller's products under a traditional costing system. Note: Round your intermediate calculations and final answers to 2 decimal places. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Select the appropriate cost driver for each activity pool and calculate the activity rates if Keller wanted to implement an ABC system. Note: Round your answers to 2 decimal places. Setup Cost Quality Control Maintenance Assuming an ABC system, assign overhead costs to each product based on activity demands. Note: Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount. Setup Cost Quality Control Maintenance Total Overhead Cost Calculate the production cost per unit for each of Keller's products with an ABC system. Note: Round your intermediate calculations and final answers to 2 decimal places. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Calculate Keller's gross margin per unit for each product under an ABC system. Note: Round your intermediate calculations and final answers to 2 decimal places. Sandy Beach Rocky River Gross Margin