Question

Keller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows: Direct materials cost per unit Direct labor cost per unit Sales price per unit Expected production per month Sandy Beach $18.70 15.10 82.70 1,150 units Rocky River $ 28.10 18.90 106.00 960 units Keller has monthly overhead of $10,844, which is divided into the following cost pools: Setup costs Quality control Maintenance Total $ 2,600 5,220 3,024 $ 10,844 The company has also compiled the following information about the chosen cost drivers: Number of setups Number of inspections Number of machine hours Sandy Beach 12 110 1,400 Rocky River 28 340 1,400 Total 40 450 2,800 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 line. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) Overhead Assigned Sandy Beach Model Rocky River Model Total Overhead Cost $

Answer 1

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Requirement 1)
	OH Assigned
Sandy Beach	5,422
Rocky River	5,422
	10,844
Requirement 2)
	Sandy Beach	Rocky River
Units Cost	38.51	52.65
Direct Material Per Units	18.70	28.10
Direct Labor Per Units	15.10	18.90
OH Per Unit	4.71	5.65
Requirement 3)
	Sandy Beach	Rocky River
Sales Price Per Unit	82.70	106.00
Units Cost	38.51	52.65
Gross Margin	44.19	53.35
Requirement 4)
	Driver	Activit Rate
Setup	No. of Setup	65
Quality Control	No. of Inspections	12
Maintenance	No. of Machine Hours	1
Requirement 5)
	Sandy Beach	Rocky River
Setup	780	1820
Quality Control	1276	3944
Maintenance	1512	1512
Total	3568	7276
Requirement 6)
	Sandy Beach	Rocky River
Units Cost	36.90	54.58
Direct Material Per Units	18.70	28.10
Direct Labor Per Units	15.10	18.90
OH Per Unit	3.10	7.58
Requirement 7)
	Sandy Beach	Rocky River
Sales Price Per Unit	82.70	106.00
Units Cost	36.90	54.58
Gross Margin	45.80	51.42
Requirement 8)
	Sandy Beach	Rocky River
Gross Margin Traditional	44.19	53.35
Gross Margin ABC	45.80	51.42