Harbour has monthly overhead of $195,085, which is divided into the following cost pools:
Setup costs $ 82,390
Quality control 66,495
Maintenance 46,200
Total $ 195,085
The company has also compiled the following information about the chosen cost drivers:
Home Work Total
Number of setups 38 69 107
Number of inspections 330 385 715
Number of machine hours 1,200 2,100 3,300
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.)
2. Calculate the production cost per unit for each of HarbourAc€?cs products under a traditional costing system.(Round your intermediate calculations and final answers to 2 decimal places.)
3. Calculate HarbourAc€?cs gross margin per unit for each product under the traditional costing system.(Round your intermediate calculations and final answers to 2 decimal places.)
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 HarbourAc€?cs products in an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)
7. Calculate HarbourAc€?cs gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)
8. Compare the gross margin of each product under the traditional system and ABC. (Round your answers to 2 decimal places.)