Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production...

Transcribed Image Text:

Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Home $ 40 21 364 Work $ 64 35 578 660 units 350 units Harbour has monthly overhead of $166,370, which is divided into the following activity pools: Setup costs Maintenance Quality control Total $ 73,320 63,050 30,000 $ 166,370 The company also has compiled the following information about the chosen cost drivers: Number of setups Home 39 Number of inspections 310 Number of machine hours 1,200 Work 55 340 1,800 Total 94 650 3,000 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 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. Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Home $ 40 21 364 Work $ 64 35 578 660 units 350 units Harbour has monthly overhead of $166,370, which is divided into the following activity pools: Setup costs Maintenance Quality control Total $ 73,320 63,050 30,000 $ 166,370 The company also has compiled the following information about the chosen cost drivers: Number of setups Home 39 Number of inspections 310 Number of machine hours 1,200 Work 55 340 1,800 Total 94 650 3,000 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 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.