## Answers

total oh | MH | mh's % | overhead | |||||

a | b | assinged | ||||||

1) | Sandy Beach Model | 11,716 | 1,750 | 50% | 5858 | |||

Rocky river model | 11,716 | 1,750 | 50% | 5858 | ||||

total overhead costs | 3,500 | |||||||

overhead assigned | ||||||||

Sandy Beach Model | 5858 | |||||||

Rocky river model | 5858 | |||||||

2) | sandy | rocky | ||||||

Direct materials per unit | 19.00 | 27.40 | ||||||

direct labor per unit | 14.60 | 17.30 | ||||||

overhead per unit | ||||||||

sandy | 4.84 | |||||||

Rocky | 6.44 | |||||||

unit cost | 38.44 | 51.14 | answer | |||||

3) | Gross margin | |||||||

sandy | rocky | |||||||

Sales price per unit | 82.3 | 106 | ||||||

unit product cost | 38.44 | 51.14 | ||||||

Gross margin | 43.86 | 54.86 | answer | |||||

total cost | activity | rate | cost driver | |||||

4) | a | b | c=a/b | |||||

Setup costs | 2,135 | 35 | 61 | per setup | ||||

Quality control | 5,626 | 485 | 11.6 | per inspection | ||||

maintenance | 3,955 | 3,500 | 1.13 | per machin hour | ||||

5) | overhead | overhead | ||||||

sandy | rocky | |||||||

Setup costs | 854 | 1281 | ||||||

Quality control | 1856 | 3770 | ||||||

maintenance | 1977.5 | 1977.5 | ||||||

total | 4687.5 | 7028.5 | ||||||

6) | sandy | rocky | ||||||

Direct materials per unit | 19.00 | 27.40 | ||||||

direct labor per unit | 14.60 | 17.30 | ||||||

overhead per unit | ||||||||

sandy | 3.87 | |||||||

Rocky | 7.72 | |||||||

unit cost | 37.47 | 52.42 | answer | |||||

7) | Gross margin | |||||||

sandy | rocky | |||||||

Sales price per unit | 82.3 | 106 | ||||||

unit product cost | 37.47 | 52.42 | ||||||

Gross margin | 44.83 | 53.58 | answer | |||||

sandy | rocky | |||||||

8) | Gross margin (Traditional) | 43.86 | 54.86 | |||||

Gross margin (ABC) | 44.83 | 53.58 | ||||||

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