Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows:
Home Work
Direct materials cost per unit $ 42 $ 65
Direct labor cost per unit 17 39
Sales price per unit 364 571
Expected production per month 640 units 360 units
Harbour has monthly overhead of $184,390, which is divided into the following activity pools:
Setup costs $ 82,950
Quality control 59,840
Maintenance 41,600
Total $ 184,390
The company also has compiled the following information about the chosen cost drivers:
Home Work Total
Number of setups 45 60 105
Number of inspections 310 370 680
Number of machine hours 1,300 1,300 2,600
Required:
Suppose Harbour uses a traditional costing system with machine hours as the cost driver. Determine the amount of overhead assigned to each product line.
Calculate the production cost per unit for each of Harbour’s products under a traditional costing system.