Solution 1: | |
Overhead Assigned (Traditional Costing) | |
Home model | $96,640 |
Work model | $72,480 |
Total overhead costs | $169,120 |
Solution 2: | ||
Computation of product cost per unit (Traditional) | ||
Particulars | Home | Work |
Direct material cost per unit | $39.00 | $63.00 |
Direct labor cost per unit | $24.00 | $30.00 |
Overhead cost per unit Home - $96,640 / 750 Work - $72,480 / 420 |
$128.85 | $172.57 |
Production cost per unit | $191.85 | $265.57 |
Solution 3: | ||
Computation of Gross Margin per unit (Traditional) | ||
Particulars | Home | Work |
Selling price per unit | $364.00 | $576.00 |
Production cost per unit | $191.85 | $265.57 |
Gross Margin per unit | $172.15 | $310.43 |
Solution 4 & 5: | ||||||||
Computation of activity rate and Allocation of overhead to Products - ABC - Harbour | ||||||||
Activity | Estimated Overhead Cost | Activity Base | Usage of Activity Base | Activity Rate | Home | Work | ||
Usage | Allocated Costs | Usage | Allocated Costs | |||||
Setup costs | $78,120.00 | Nos of setups | 93 | $840.00 | 36 | $30,240 | 57 | $47,880 |
Quality control | $54,600.00 | Nos of inspections | 650 | $84.00 | 350 | $29,400 | 300 | $25,200 |
Maintenance | $36,400.00 | Machine hours | 2800 | $13.00 | 1600 | $20,800 | 1200 | $15,600 |
Total | $169,120.00 | $80,440.00 | $88,680.00 | |||||
Nos of units | 750 | 420 | ||||||
Overhead cost per unit | $107.25 | $211.14 |
Solution 6: | ||
Computation of product cost per unit - Harbour Company - ABC | ||
Particulars | Home | Work |
Direct material cost per unit | $39.00 | $63.00 |
Direct labor cost per unit | $24.00 | $30.00 |
Overhead cost per unit | $107.25 | $211.14 |
Production cost per unit | $170.25 | $304.14 |
Solution 7: | ||
Computation of Gross Margin per unit - ABC | ||
Particulars | Home | Work |
Selling price per unit | $364.00 | $576.00 |
Production cost per unit | $170.25 | $304.14 |
Gross Margin per unit | $193.75 | $271.86 |
Solution 8: | ||
Comparison of Gross Margin under traditional system and ABC | ||
Particulars | Home | Work |
Gross Margin ( Traditional) | $172.15 | $310.43 |
Gross Margin (ABC) | $193.75 | $271.86 |
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