Atlantic Inc. has a small boat assembly plant and has recently started using activity-based costing. The...

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Atlantic Inc. has a small boat assembly plant and has recently started using activity-based costing. The company's manufacturing facility has the following activities: Activity Allocation Base Quantity Budgeted Overhead Cost Purchasing Number of purchase orders 1,180 $ 153,400 Tooling Number of machine hours 8,500 212,500 Assembling Number of parts 60,000 300,000 Quality Number of inspections 2,500 175,000 Packaging Number of finished boats 3,000 270,000 A newly established beach resort has asked Atlantic for a bid on 45 speed boats with turbo engine and a seating capacity of up to 10 tourists. The production department has calculated and submitted the following estimates for the manufacturing of 45 boats speed boats. Each boat will require direct material of $1,250 and some 60 direct labor hours and 15 machine hours will be required to complete one boat. As highly specialized and technical staff is required for such jobs, the labor is paid $16 per direct labor hours. Furthermore, 50 different parts would need to be assembled. Procurement department will have to place a total of 70 purchase orders to complete 45 boats if the bid is accepted. Requirements: 1) Compute the total cost, including primary costs, and all the related overhead and production costs to purchase the needed materials, then assemble, inspect and package 20 boats. Also, compute the average overhead and overall manufacturing cost per boat. 2) What total and unit price will Atlantic Inc. bid for the entire order if the company adds 35% profit margin above cost? 3) Suppose that instead of an ABC system, Atlantic Inc. uses a traditional product costing system that allocates indirect costs at the rate of $17.5 per direct labor hour. What price will Atlantic Inc. bid using traditional cost allocation basis, assuming a 35% profit margin on total production cost? 4) If instead the overhead cost is allocated @ $62.5 per machine hour, then what would be the total and per unit cost and bid price assuming a 35% profit margin? 5) Use your answers to Requirements 2, 3 and 4 to explain how ABC can help Atlantic Inc. make a better decision about the total bid price of the order by showing cost and percentage analysis for the allocated costs. Atlantic Inc. has a small boat assembly plant and has recently started using activity-based costing. The company's manufacturing facility has the following activities: Activity Allocation Base Quantity Budgeted Overhead Cost Purchasing Number of purchase orders 1,180 $ 153,400 Tooling Number of machine hours 8,500 212,500 Assembling Number of parts 60,000 300,000 Quality Number of inspections 2,500 175,000 Packaging Number of finished boats 3,000 270,000 A newly established beach resort has asked Atlantic for a bid on 45 speed boats with turbo engine and a seating capacity of up to 10 tourists. The production department has calculated and submitted the following estimates for the manufacturing of 45 boats speed boats. Each boat will require direct material of $1,250 and some 60 direct labor hours and 15 machine hours will be required to complete one boat. As highly specialized and technical staff is required for such jobs, the labor is paid $16 per direct labor hours. Furthermore, 50 different parts would need to be assembled. Procurement department will have to place a total of 70 purchase orders to complete 45 boats if the bid is accepted. Requirements: 1) Compute the total cost, including primary costs, and all the related overhead and production costs to purchase the needed materials, then assemble, inspect and package 20 boats. Also, compute the average overhead and overall manufacturing cost per boat. 2) What total and unit price will Atlantic Inc. bid for the entire order if the company adds 35% profit margin above cost? 3) Suppose that instead of an ABC system, Atlantic Inc. uses a traditional product costing system that allocates indirect costs at the rate of $17.5 per direct labor hour. What price will Atlantic Inc. bid using traditional cost allocation basis, assuming a 35% profit margin on total production cost? 4) If instead the overhead cost is allocated @ $62.5 per machine hour, then what would be the total and per unit cost and bid price assuming a 35% profit margin? 5) Use your answers to Requirements 2, 3 and 4 to explain how ABC can help Atlantic Inc. make a better decision about the total bid price of the order by showing cost and percentage analysis for the allocated costs.