KellerKeller 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 $ $18\mathrm{.}70$ $ $26\mathrm{.}80$

Direct labor cost per unit $14\mathrm{.}0017\mathrm{.}30$

Sales price per unit $84\mathrm{.}10106\mathrm{.}00$

Expected production per month $1,240$ units $990$ units

Keller has monthly overhead of $$11,190,$ which is divided into the following activity pools:

Setup costs $ $2,280$

Quality control $5,720$

Maintenance $3,190$

Total $ $11,190$

The company also has compiled the following information about the chosen cost drivers:

Sandy Beach Rocky River Total

Number of setups $192140$

Number of inspections $170295465$

Number of machine hours $1,4501,4502,900$

Required:

Suppose Keller 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 Keller$$s products under a traditional costing system.

Calculate Keller$$s gross margin per unit for each product under the traditional costing system.

Select the appropriate cost driver for each activity pool and calculate the activity rates if Keller wanted to implement an ABC system.

Assuming an ABC system, assign overhead costs to each product based on activity demands.

Calculate the production cost per unit for each of Keller$$s products with an ABC system.

Calculate Keller$$s gross margin per unit for each product under an ABC system.

Compare the gross margi of each product under the traditional system and ABC.