2 Please include all details on this sheet. Formulas must be used. 3 If the number is wrong and you do not include enough detailed calculations, no partial credit will be given. 4 No credit will be given for just answers. 5 6 Coastal Corporation manufactures two types of kayaks-Ocean and fishing-and applies manufacturing overhead to all units using machine hours. Production information follows. 7 Ocean Fishing 8 Anticipated volume (units) 58,500 31,200 9 Direct-material cost per unit $ 50 $ 70 52 62 10 Direct-labor cost per unit 11 12 13 The controller, who is studying the use of activity- based costing, has determined that the firm's overhead 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 13 the activities' three respective cost drivers, follow. 14 Ocean Fishing 15 Setups 176 16 Machine hours 62,400 87,750 17 Purchase orders 200 150 18 19 20 The firm's total overhead is: $23,423,400 21 It is subdivided as follows: manufacturing setups $5,110,560 22 machine processin $14,054,040 23 purchase orders $4,258,800 24 Required: 25 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. 26 (show all costs included in manufacturing costs) 27 2. Compute the per unit total manufacturing cost of Ocean and Fishing kayaks by using activity-based costing. 28 (show all costs included in manufacturing costs) 29 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. 30 31 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... 32 33 5. Which method should the company use and why? List at least 3 reasons... 34