Question

Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows: Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Home Work $ 35 $ 67 21 39 351 568 740 units 470 units Harbour has monthly overhead of $184,250, which is divided into the following cost pools: Setup costs Quality control Maintenance Total $ 87,980 54,270 42,000 $184,250 The company has also compiled the following information about the chosen cost drivers: Number of setups Number of inspections Number of machine hours Home 40 300 1,700 Work 66 370 1,100 Total 106 670 2,800 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 and round your final answers to the nearest whole dollar amount.) Overhead Assigned Home Model: Work Model: Total Overhead Cost $

Answer 1

The answer has been presented in the supporting sheet. First 4 parts has been solved with detailed explanation and calculation. For remaining parts you have to post separate question. For detailed answer refer to the supporting sheet.

Answer 2 Part 1) 3 Overheads assigned to Home model 4 = machine hours for home model * overhead rate based on machine hours 5 = 1700*(184250/2800) 5 = 1700*65.80357 7 = $ 111866 - Overheads assigned to work model 0 = machine hours for work * overhead rate 1 = 1100*(184250/2800) 2 = 1100*65.80357 3 = $ 72384 5 Thus the finala snwer is Overheads assigned 7 Home Model 8 Work Model 1,11,866 72,384

o Part 2) Production Cost Per unit 2 Particulars Home Model Work Model 3 Direct Material $ 35 $ 67 4 Direct Labour 21 $ 39 5 Overheads Per Unit $ 151.17 $ 154.01 (111866/740) (72384/470) 7 Total cost per unit $ 207.17 $ 260.01 9 Thus the final answer is Home Model Work Model 1 Total cost per unit 207.17 260.01 3 Part 3) Gross Margin Per unit Home Model Work Model 6 Sale Price 351 $ 568 7 Unit cost 207.17 $ 260.01 8 Gross Margin 143.83 $ 307.99 0 Thus the final answer is Home Model 2 Gross Margin Work Model 143.83 $ 307.99

44 Part 4) Statement for activity rate 46 Cost Cost drivers overhead cost number of activity Rate Per activity 47 Set up cost numder of setups 87980 106 830 48 quality control number of inspections 54270 670 49 Maintenance number of machine hours 42000 2800 50 51 Thus the final asnwer is 830 54 Set up cost numder of setups 55 quality control number of inspections 56 Maintenance number of machine hours 57 58 Note as per HomeworkLib policy we are required to solve the first 4 parts only, for remaining parts you have to post separate question, Thank You