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 $ 38 20 362 Work $ 62 39 585 720 units 470 units Harbour has monthly overhead of $184,045, which is divided into the following activity pools: Setup costs Quality control Maintenance Total $ 69,920 64,125 50,000 $ 184,045 The company also has compiled the following information about the chosen cost drivers: Number of setups Number of inspections Number of machine hours Required: Home 42 Work Total 310 1,300 50 365 1,200 99 675 2,500 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. 2. Calculate the production cost per unit for each of Harbour's products under a traditional costing system. 3. Calculate Harbour'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 Harbour 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 Harbour's products in an ABC system. 7. Calculate Harbour's gross margin per unit for each product under an ABC system. 8. Compare the gross margin of each product under the traditional system and ABC. Complete this question by entering your answers in the tabs below.
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 $ 38 20 362 Work $ 62 39 585 720 units 470 units Harbour has monthly overhead of $184,045, which is divided into the following activity pools: Setup costs Quality control Maintenance Total $ 69,920 64,125 50,000 $ 184,045 The company also has compiled the following information about the chosen cost drivers: Number of setups Number of inspections Number of machine hours Required: Home 42 Work Total 310 1,300 50 365 1,200 99 675 2,500 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. 2. Calculate the production cost per unit for each of Harbour's products under a traditional costing system. 3. Calculate Harbour'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 Harbour 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 Harbour's products in an ABC system. 7. Calculate Harbour's gross margin per unit for each product under an ABC system. 8. Compare the gross margin of each product under the traditional system and ABC. Complete this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text: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
$ 38
20
362
Work
$ 62
39
585
720 units
470 units
Harbour has monthly overhead of $184,045, which is divided into the following activity pools:
Setup costs
Quality control
Maintenance
Total
$ 69,920
64,125
50,000
$ 184,045
The company also has compiled the following information about the chosen cost drivers:
Number of setups
Number of inspections
Number of machine hours
Required:
Home
42
Work
Total
310
1,300
50
365
1,200
99
675
2,500
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.
2. Calculate the production cost per unit for each of Harbour's products under a traditional costing system.
3. Calculate Harbour'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 Harbour 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 Harbour's products in an ABC system.
7. Calculate Harbour's gross margin per unit for each product under an ABC system.
8. Compare the gross margin of each product under the traditional system and ABC.
Complete this question by entering your answers in the tabs below.
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