Question: PA4-3 Selecting Cost Drivers, Assigning Costs Using Activity Rates [LO 4-1, 4-3, 4-4, 4-6 ] Harbour Company makes two models of electronic tablets, the Home

PA4-3 Selecting Cost Drivers, Assigning Costs Using Activity Rates [LO 4-1, 4-3, 4-4, 4-6 ]

Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows:
Home Work
Direct materials cost per unit $ 30 $ 48
Direct labor cost per unit 20 30
Sales price per unit 300 500
Expected production per month 700 units 400 units

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

Setup costs $ 68,800
Quality control 58,400
Maintenance 48,000
Total $ 175,200

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

Home Work Total
Number of setups 42 58 100
Number of inspections 340 390 730
Number of machine hours 1,700 1,300 3,000

8. Compare the gross margin of each product (HOME, WORK) under the traditional system and ABC. (Round your answers to 2 decimal places.)

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