Question

Harbour Company makes two models of electronic tablets, the Home and the Work. Basic production information follows:

Answer 1

Answer:

Instructions are below.

Explanation:

a)

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= 180,660/2,600

Predetermined manufacturing overhead rate= $69.49 per machine hour

Now, we can allocate overhead to each product line:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Home= 69.49*1,200= $83,388

Work= 69.49*1,400= $97,286

b) We need to determine the unitary cost for each product:

Home:

Unitary cost= 38 + 23 + (83,388/620)= $195.50

Work:

Unitary cost= 72 + 40 + (97,286/490)= $310.54

c) Gross margin= selling price - unitary cost

Home:

Gross margin= 359 - 195.5= $163.4

Work:

Gross margin= 573 - 310.54= $262.46