Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Home Work $ 37 $ 64 Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month 25 34 351 577 660 units 400 units Harbour has monthly overhead of $180,370, which is divided into the following cost pools: $ 73,710 68,160 38,500 Setup costs Quality control Maintenance Total $180,370 The company has also compiled the following information about the chosen cost drivers: Home Work Total Number of setups Number of inspections Number of machine hours 40 51 91 300 410 710 1,500 2,000 3,500 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.) Overhead Assigned Home Model: Work Model: Total Overhead Cost 2. Calculate the production cost per unit for each of Harbour's products under a traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Unit Cost 3. Calculate Harbour's gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Gross Margin
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Pre-determined overhead rate = Total overhead cost / Total machine hours
Unit Cost = Total cost / Number of units
Gross margin per unit = Selling price per unit - Unit cost
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