As you learned in the previous chapters, Current Designs has two main product linescomposite kayaks. which are handmade and very labour-intensive, and rotomoulded kayaks, which require less labour but use more expensive equipment. Current Designs' control ler, Maria Miller. is now evaluating several methods of assigning overhead to these products. It is important to ensure that costs are appropriately assigned to the company's products. At the same time, the system that is used must not be so complex that its costs are greaterthan its benets. Maria has decided to use the fol lowing activities and costs to evaluate the methods of assigning overhead. Activity Cost Designing new models $128,000 Creating and testing prototypes 160,000 Creating moulds for kayaks 132,000 Operating the oven for the rotomoulded kayaks 42,000 Operating the vacuum line for the composite kayaks 26,000 Supervising production employees 134,000 Curing {the time that is needed for the chemical processes to nish before the next step in the production process; many of these costs are related to the space required in the building} 160,000 Total $ 832,000 As Maria examines the data, she decides that the cost of operatingthe oven for the rotomoulded kayaks and the cost of operating the vacuum line for the composite kayaks can be directly assigned to each of these product lines and do not need to be allocated with the other costs. For purposes of this analysis, assume that Current Designs uses $223,000 in direct labour costs to produce 1,000 composite kayaks and $285,750 in direct labour costs to produce 4,000 rotomoulded kayaks each year. (a) V Your answer is correct. One method of allocating overhead would assign the common costs to each product line by using an allocation basis such as the number of employees working on each type of kayak or the amount of factory space used for the production of each type of kayak. Maria knows that about 50% of the area of the plant and 50% of the employees relate to the composite kayaks, and the remaining space and other employees are used for the rotomoulded kayaks. Using this information, and remembering that the costs of operating the oven and the vacuum lines have been directly assigned, determine the total amount to be assigned to the composite kayak line and the rotomoulded kayak line, and the amount to be assigned to of the units in each line. (Round cost assigned per unit to 2 decimal places, e.g. 125.25.) Composite Rotomoulded Total cost assigned 433000 449000 Cost assigned per unit 433 112.25 eTextbook and Media Attempts: 1 of 3 used Using multiple attempts will impact your score. 10% score reduction after attempt 2lb) Another method of allocating overhead is to use direct labour dollars as an allocation basis. Remembering that the costs of operating the oven and the vacuum line have been assigned directly to the product lines, assign the remaining costs using direct labour dollars as the allocation basis. Then, determine the amount of overhead that should be assigned to each of the units in each line. (Round costassisned' per unit to 2 decimal places, 23. 125.25.} Composite Ratomuulded Total costassigned $ l $ l Cost assigned per unit 55 l $ l eTextbook and Media Save for Later Attempts: ID of 3 used Using multiple attempts will impact your score. 10% score reduction after attempt 2