E4-4 Assigning Costs Using Activity Rates [LO 4-4] Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows: Total Cost Estimated Cost Driver Activity Cost Pools Machining Designing costs Setup costs of Pool Cost Driver $183,300 47,725 71,150 Number of machine hours 61,100 5,750 500 Number of design hours Number of batches Suppose that Gable Company manufactures three products, A, B, and C. Information about these products follows: Product A Product B Product C 21,000 2,300 60 31,000 1,350 180 9,100 2,100 260 Number of machine hours Number of design hours Number of batches Required: Using activity rates, determine the amount of overhead assigned to each product. (Round activity rates to 2 decimal places. Round your other intermediate calculations and final answer to the nearest whole dollar amount.) Total Overhead Assigned 89,920 Product A $ $ Product B 129,360 Product C 81,020 3. Calculate Harbour's gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.) Home Work Gross Margin 4. Select the appropriate cost driver for each cost pool and calculate the activity rates if Harbour wanted to implement an ABC system Setup Costs Quality Control Maintenance 5. Assuming an ABC system, assign overhead costs to each product based on activity demands. Overhead Assigned To Work Overhead Assigned To Home Setup Costs Quality Control Maintenance 0$ $ 0 Total Overhead Cost
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows:
| Home | Work | |||||
| Direct materials cost per unit | $ | 37 | $ | 65 | ||
| Direct labor cost per unit | 17 | 38 | ||||
| Sales price per unit | 361 | 577 | ||||
| Expected production per month | 680 | units | 300 | units | ||
Harbour has monthly
| Setup costs | $ | 86,670 |
| Quality control | 64,350 | |
| Maintenance | 42,000 | |
| Total | $ | 193,020 |
The company has also compiled the following information about the chosen cost drivers:
| Home | Work | Total | |
| Number of setups | 38 | 69 | 107 |
| Number of inspections | 330 | 385 | 715 |
| Number of machine hours | 1,700 | 1,100 | 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.)
2. Calculate the production cost per unit for each of Harbour’s products under a traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.)
3. Calculate Harbour’s gross margin per unit for each product under the traditional costing system. (Round your intermediate calculations and final answers to 2 decimal places.)
4. Select the appropriate cost driver for each cost pool and calculate the activity rates if Harbour wanted to implement an ABC system.
5. Assuming an ABC system, assign overhead costs to each product based on activity demands.
6. Calculate the production cost per unit for each of Harbour’s products in an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)
7. Calculate Harbour’s gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places.)
8. Compare the gross margin of each product under the traditional system and AB
Im confused on how to solve the problems 1-8 i had asked this previously and did not get the answer i needed im still getting it incorrect
![E4-4 Assigning Costs Using Activity Rates [LO 4-4]
Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows:
Total Cost
Estimated Cost
Driver
Activity Cost Pools
Machining
Designing costs
Setup costs
of Pool
Cost Driver
$183,300
47,725
71,150
Number of machine hours
61,100
5,750
500
Number of design hours
Number of batches
Suppose that Gable Company manufactures three products, A, B, and C. Information about these products follows:
Product A
Product B
Product C
21,000
2,300
60
31,000
1,350
180
9,100
2,100
260
Number of machine hours
Number of design hours
Number of batches
Required:
Using activity rates, determine the amount of overhead assigned to each product. (Round activity rates to 2 decimal places. Round your other
intermediate calculations and final answer to the nearest whole dollar amount.)
Total Overhead
Assigned
89,920
Product A
$
$
Product B
129,360
Product C
81,020](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc538f540-c09d-453f-b85d-1302807e9c91%2F3a10ad7a-4405-4650-b249-8bc8b360cdbe%2F1ehzoe.png&w=3840&q=75)
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