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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 Harbour has monthly overhead of $190,025, which is divided into the following activity pools: Setup costs Quality control Maintenance Total $ 77,080 66,445 46,500 $ 190,025 Number of setups Number of inspections Number of machine hours Home $ 40 18 356 760 units Home Work 36 58 335 350 1,400 1,700 Work The company also has compiled the following information about the chosen cost drivers: Total 94 685 3,100 $ 67 31 583 400 units 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. 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

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 Harbour has monthly overhead of $190,025, which is divided into the following activity pools: Setup costs Quality control Maintenance Total $ 77,080 66,445 46,500 $ 190,025 Number of setups Number of inspections Number of machine hours Home $ 40 18 356 760 units Home Work 36 58 335 350 1,400 1,700 Work The company also has compiled the following information about the chosen cost drivers: Total 94 685 3,100 $ 67 31 583 400 units 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. 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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Book Print erences 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 Harbour has monthly overhead of $190,025, which is divided into the following activity pools: Setup costs Quality control Maintenance Total $ 77,080 66,445 46,500 $ 190,025 Number of setups Number of inspections Number of machine hours Home 36 Home 350 1,400 $ 40 18 356 760 units The company also has compiled the following information about the chosen cost drivers: Work 58 335 1,700 Work Total 94 685 3,100 $ 67 31 583 400 units 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. 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 rages 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.
Transcribed Image Text:Book Print erences 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 Harbour has monthly overhead of $190,025, which is divided into the following activity pools: Setup costs Quality control Maintenance Total $ 77,080 66,445 46,500 $ 190,025 Number of setups Number of inspections Number of machine hours Home 36 Home 350 1,400 $ 40 18 356 760 units The company also has compiled the following information about the chosen cost drivers: Work 58 335 1,700 Work Total 94 685 3,100 $ 67 31 583 400 units 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. 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 rages 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.
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