Question

Check my work Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows: Sandy Beach Direct materials cost per unit $18.60 Direct labor cost per unit 14.80 Sales price per unit 83.40 Expected production per month 1,230 units Rocky River $ 26.40 18.30 105.00 930 units Keller has monthly overhead of $13,493, which is divided into the following cost pools: Setup costs Quality control Maintenance Total $ 3, 250 6, 283 3,960 $ 13, 493 The company has also compiled the following information about the chosen cost drivers: Sandy Beach 20 Number of setups Number of inspections Number of machine hours Rocky River 30 355 1,650 Total 50 515 3,300 160 1,650 Required: 1. Suppose Keller uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product < Prey. 8 of 8 !!! Next

Answer 1

Part 2
	Calculation of Overhead cost per unit
		Sandy Beach	Rocky River
	Overhead Cost assigned	$6,746	$6,746
	Production per month(in units)	1230	930
	Overhead Cost per unit	$5.48	$7.25
	Calculation of Production cost per unit
		Sandy Beach	Rocky River
	Direct material cost per unit	$18.60	$26.40
	Direct labor cost per unit	$14.80	$18.30
	Overhead Cost per unit	$5.48	$7.25
	Production cost per unit	$38.88	$51.95
Part 3	Calculation of Gross margin per unit
		Sandy Beach	Rocky River
	Sales price per unit	$83.40	$105.00
	Less:Production cost per unit	$38.88	$51.95
	Gross margin per unit	$44.52	$53.05
Part 4		Cost Driver	Activity Costs	Cost Driver Quantity	Activity Rate
	Setup Costs	No. of Setups	$3,250	50	$65.00
	Quality Control	No. of inspections	$6,283	515	$12.20
	Maintainance	No. of machine hours	$3,960	3300	$1.20