Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows: Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Sandy Beach $ 18.40 Rocky River $ 26.90 13.40 83.80 17.80 106.00 1,240 units 980 units Keller has monthly overhead of $12,276, which is divided into the following activity pools: Setup costs Quality control Maintenance Total $ 3,050 5,384 3,842 $ 12,276 The company also has compiled the following information about the chosen cost drivers: Sandy Rocky Beach River Number of setups 19 31 Number of inspections Number of machine hours 170 1,700 275 1,700 Total 50 445 3,400 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 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. Overhead Assigned To Sandy Beach Overhead Assigned To Rocky River Setup Cost $ 1,159 $ 1,891 Quality Control $ 2,057 $ 3,327 Maintenance $ 1,921 $ 1,921 Total Overhead Cost $ 5,137 $ 7,139

Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows: Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Sandy Beach $ 18.40 Rocky River $ 26.90 13.40 83.80 17.80 106.00 1,240 units 980 units Keller has monthly overhead of $12,276, which is divided into the following activity pools: Setup costs Quality control Maintenance Total $ 3,050 5,384 3,842 $ 12,276 The company also has compiled the following information about the chosen cost drivers: Sandy Rocky Beach River Number of setups 19 31 Number of inspections Number of machine hours 170 1,700 275 1,700 Total 50 445 3,400 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 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. Overhead Assigned To Sandy Beach Overhead Assigned To Rocky River Setup Cost $ 1,159 $ 1,891 Quality Control $ 2,057 $ 3,327 Maintenance $ 1,921 $ 1,921 Total Overhead Cost $ 5,137 $ 7,139

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter9: Standard Costing: A Functional-based Control Approach

Section: Chapter Questions

Problem 33P: Business Specialty, Inc., manufactures two staplers: small and regular. The standard quantities of...

See similar textbooks