3.4 Connect: Cases and Problems Assignment
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3.4.10manfin.docxKeller Company makes two models of battery-operated boats, the Sandy Beach and the Rocky River. Basic production information follows:
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|
Sandy Beach |
Rocky River |
||||
|
Direct materials cost per unit |
$ |
19.50 |
|
$ |
27.20 |
|
|
Direct labor cost per unit |
|
13.40 |
|
|
18.70 |
|
|
Sales price per unit |
|
83.50 |
|
|
106.00 |
|
|
Expected production per month |
|
1,230 |
units |
|
910 |
units |
|
|
Keller has monthly overhead of $11,307, which is divided into the following cost pools:
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|
|
|
|
Setup costs |
$ |
1,995 |
|
Quality control |
|
5,640 |
|
Maintenance |
|
3,672 |
|
Total |
$ |
11,307 |
|
|
The company has also compiled the following information about the chosen cost drivers:
|
|
Sandy Beach |
Rocky River |
Total |
|
Number of setups |
14 |
21 |
35 |
|
Number of inspections |
130 |
340 |
470 |
|
Number of machine hours |
1,700 |
1,700 |
3,400 |
|
|
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.)
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|
Overhead Assigned |
|
Sandy Beach Model |
|
|
Rocky River Model |
|
|
Total Overhead Cost |
$ |
2. Calculate the production cost per unit for each of Keller’s products under a traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.)
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Sandy Beach |
Rocky River |
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Unit cost |
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|
3. Calculate Keller’s gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.)
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Sandy Beach |
Rocky River |
|
Gross Margin |
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|
4. Select the appropriate cost driver for each cost pool and calculate the activity rates if Keller wanted to implement an ABC system. (Round your answers to 2 decimal places.)
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|
|
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Setup Costs |
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|
|
Quality Control |
|
|
|
Maintenance |
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|
5. Assuming an ABC system, assign overhead costs to each product based on activity demands. (Round your intermediate calculations to 2 decimal places and final answers to the nearest whole dollar amount.)
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Overhead Assigned to Sandy Beach |
Overhead Assigned to Rocky River |
|
Setup Cost |
|
|
|
Quality Control |
|
|
|
Maintenance |
|
|
|
Total Overhead Cost |
$ |
$ |
6. Calculate the production cost per unit for each of Keller’s products with an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)
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|
Sandy Beach |
Rocky River |
|
Unit Cost |
|
|
7. Calculate Keller’s gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)
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|
Sandy Beach |
Rocky River |
|
Gross Margin |
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|
8. Compare the gross margin per unit of each product under the traditional system and ABC. (Round your answers to 2 decimal places.)
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Sandy Beach |
Rocky River |
|
Gross Margin (Traditional) |
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Gross Margin (ABC) |
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|
Keller Company makes two models of battery
-
operated boats, the Sandy
Beach and the Rocky River. Basic production information follows:
Sandy Beach
Rocky River
Direct materials cost
per unit
$
19.50
$
27.20
Direct labor cost per
unit
13.40
18.70
Sales price per unit
83.50
106.00
Expected production
per month
1,230
units
910
units
Keller has monthly overhead of $11,307, which is divided into the following
cost pools:
Setup costs
$
1,995
Quality control
5,640
Maintenance
3,672
Total
$
11,307
The company has also compiled the following information about the chosen
cost drivers:
Sandy Beach
Rocky River
Total
Number of setups
14
21
35
Number of inspections
130
340
470
Number of machine hours
1,700
1,700
3,400
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 Assign
ed
Sandy Beach Model
Rocky River Model
Total Overhead Cost
$
Keller Company makes two models of battery-operated boats, the Sandy
Beach and the Rocky River. Basic production information follows:
Sandy Beach Rocky River
Direct materials cost
per unit
$ 19.50 $ 27.20
Direct labor cost per
unit
13.40 18.70
Sales price per unit 83.50 106.00
Expected production
per month
1,230 units 910 units
Keller has monthly overhead of $11,307, which is divided into the following
cost pools:
Setup costs $ 1,995
Quality control 5,640
Maintenance 3,672
Total $ 11,307
The company has also compiled the following information about the chosen
cost drivers:
Sandy Beach Rocky River Total
Number of setups 14 21 35
Number of inspections 130 340 470
Number of machine hours 1,700 1,700 3,400
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 $
