iCoastal Corporation manufactures two types of kayaks-Ocean and fishing-and applies manufacturing overhead to all units using...
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iCoastal Corporation manufactures two types of kayaks-Ocean and fishing-and applies manufacturing overhead to all units using machine hours. Production information follows. Ocean Fishing Anticipated volume (units) Direct-material cost per unit 58,500 31,200 50 2$ 70 Direct-labor cost per unit 52 62 The controller, who is studying the use of activity- based costing, has determined that the firm's joverhead can be identified with three activities: manufacturing setups, machine processing, and purchase orders. Data on the number of setups, machine hours, and purchase orders, which are the activities' three respective cost drivers, follow. Осean Fishing Setups 176 136 Machine hours 62,400 87,750 Purchase orders 200 150 The firm's total overhead is: It is subdivided as follows: manufacturing setups $23,423,400 $5,110,560 machine processing $14,054,040 purchase orders $4,258,800 Required: 1. Compute the per unit total manufacturing cost of Ocean and Fishing kayaks by using the company's current overhead costing procedures with machine hours. (show all costs included in manufacturing costs) 2. Compute the per unit total manufacturing cost of Ocean and Fishing kayaks by using activity-based costing. (show all costs included in manufacturing costs) 3. Assume that the current selling price of a Fishing Kayak is $655.00 and the marketing manager is contemplating a $100 discount to stimulate volume. Is this discount advisable? Show calculations to support your answer. 4. If the company wants a 25% markup, determine price. Assume competitors are selling the kayaks for $400 and $600 for ocean and fishing kayaks respectively.. i5. Which method should the company use and why? List at least 3 reasons. iCoastal Corporation manufactures two types of kayaks-Ocean and fishing-and applies manufacturing overhead to all units using machine hours. Production information follows. Ocean Fishing Anticipated volume (units) Direct-material cost per unit 58,500 31,200 50 2$ 70 Direct-labor cost per unit 52 62 The controller, who is studying the use of activity- based costing, has determined that the firm's joverhead can be identified with three activities: manufacturing setups, machine processing, and purchase orders. Data on the number of setups, machine hours, and purchase orders, which are the activities' three respective cost drivers, follow. Осean Fishing Setups 176 136 Machine hours 62,400 87,750 Purchase orders 200 150 The firm's total overhead is: It is subdivided as follows: manufacturing setups $23,423,400 $5,110,560 machine processing $14,054,040 purchase orders $4,258,800 Required: 1. Compute the per unit total manufacturing cost of Ocean and Fishing kayaks by using the company's current overhead costing procedures with machine hours. (show all costs included in manufacturing costs) 2. Compute the per unit total manufacturing cost of Ocean and Fishing kayaks by using activity-based costing. (show all costs included in manufacturing costs) 3. Assume that the current selling price of a Fishing Kayak is $655.00 and the marketing manager is contemplating a $100 discount to stimulate volume. Is this discount advisable? Show calculations to support your answer. 4. If the company wants a 25% markup, determine price. Assume competitors are selling the kayaks for $400 and $600 for ocean and fishing kayaks respectively.. i5. Which method should the company use and why? List at least 3 reasons.
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Related Book For
Accounting What the Numbers Mean
ISBN: 978-0078025297
10th edition
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele
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