# comparison to traditional costing and multi-product break-even analysis

## Project Description:

surfs up manufactures surfboards. the company produces two models: the small board and the big board. data regarding the two boards are as follows:
the big board requires \$75 in direct materials per unit, whereas the small board requires \$40. the company pays an average direct labor rate of \$13 per hour. the company has historically used direct labor hours as the activity base for applying overhead to the boards. manufacturing overhead is estimated to be \$1,664,000 per year. the big board is more complex to manufacture than the small board because it requires more machine time.
blake moore, the company’s controller, is consid- ering the use of activity-based costing to apply over- head because the surfboards require such different amounts of machining. blake has identified the fol- lowing four separate activity centers.
a. calculate the overhead rate based on traditional overhead allocation with direct labor hours as the base.
b. determine the total cost to produce one unit of each product. (use the overhead rate calculated in question a.)
c. calculate the overhead rate for each activ- ity center based on activity-based costing techniques.
d. determine the total cost to produce one unit of each product. use the overhead rates calculated in question c.
e. explain why overhead cost shifted from the high-volume product to the low-volume product under activity-based costing.a.)

don waller and company sells canisters of three mosquito repellant products: citronella, deet, and mean green. the company has annual fixed costs of \$260,000. last year, the company sold 5,000 canisters of its mosquito repellant in the ratio of 1:2:2. waller’s accounting department has compiled the following data related to the three mosquito repellants:
a. calculate the total number of canisters that must be sold for the company to break even.
b. calculate the number of canisters of citronella, deet, and mean green that must be sold to break even.
c. how might don waller and company reduce its break-even point?
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