$($a$)$

CMC determines its prices by adding $50\%$ to the cost of direct materials and direct labour. Determine if this pricing policy is

appropriate.Canadian Motorcycle Company $($CMC$)$ produces two models of motorcycles: Faster and Slower. The company has five categories of overhead costs: purchasing, receiving, machine operating, handling, and shipping. Each category represents the following percentages of total overhead costs, which amount to $$7$ million:

$\backslash$table$[[$Purchasing$,25\mathrm{.}0\%,$Handling,$10\mathrm{.}0\%],[$Receiving$,12\mathrm{.}5\%,$Shipping,$15\mathrm{.}0\%],[$Machine operating,$37\mathrm{.}5\%,,]]$

Current capacity is $200,000$ machine hours, and the current production uses $100\%$ of the available hours. The sales mix is $45\%$ Faster and $55\%$ Slower. The overhead costs are applied to each model based on machine hours.

The production costs for each model of motorcycle and other relevant information are as follows:

$\backslash$table$[[,$Faster,Slower$],[$Direct materials per unit,$$5,000,$$$3,900],[$Direct labour per unit,$$1,500,$$$1,600],[$Applied overhead,?,?$],[$Number of units produced,$1,000,1,100],[$Number of purchases,$6,4],[$Number of shipments received,$5,5],[$Percentage of machine hours consumed by each product,$50\%,50\%],[$Number of moves in handling,$50,75],[$Number of kilometres to ship to customers,$3,400,3,800]]$