Calculate the production cost per unit

Question

Company makes two models of children's playhouses, the Castle and the Mansion.

Basic production information follows:

	Castle			Mansion
Direct materials cost per unit	$	35		$	63
Direct labor cost per unit		21			36
Sales price per unit		357			572
Expected production per month		760	units		420	units

Landon has monthly overhead of $194,915, which is divided into the following cost pools:

Setup costs	$	83,300
Quality control		67,415
Maintenance		44,200
Total	$	194,915

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

	Castle	Mansion	Total
Number of setups	35	63	98
Number of inspections	320	375	695
Number of machine hours	1,100	1,500	2,600

Requirement 1:

Suppose Landon used 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 and round your final answers to the nearest whole dollar amount. Omit the "$" sign in your response.)

		Overhead assigned
Castle Model:	$
Mansion Model:	$
Total Overhead Cost	$

Requirement 2:

Calculate the production cost per unit for each of Landon's products under a traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

	Castle	Mansion
Unit cost	$	$

Requirement 3:

Calculate Landon's gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

 

	Castle	Mansion
Gross margin	$	$

Requirement 4:

Select the appropriate cost driver for each cost pool and calculate the activity rates if Landon wanted to implement an ABC system. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Setup Costs		$
Quality Control		$
Maintenance		$

Requirement 5:

Assuming an ABC system, assign overhead costs to each product based on activity demands . (Omit the "$" sign in your response.)

	Overhead Assigned To Castle		Overhead Assigned To Mansion
Setup Cost	$		$
Quality Control	$		$
Maintenance	$		$
Total Overhead Cost	$		$

Requirement 6:

Calculate the production cost per unit for each of Landon's products in an ABC system. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

 

	Castle	Mansion
Unit cost	$	$

Requirement 7:

Calculate Landon's gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.)

	Castle	Mansion
Gross margin	$	$