Question

Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows:

.:.
Harbour has monthly overhead of $175,200, which is divided into the following cost pools:

.:.
The company has also compiled the following information about the chosen cost drivers:

.:.
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 cost 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.



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  • CreatedFebruary 27, 2015
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