CHAPTER 4 HOMEWORK Question 11 B As you learned in the previous chapters, Current Designs has two main product lines-composite kayaks, which are handmade and very labor-intensive, and rotomolded kayaks, which require less labor but employ more expensive equipment. Current Designs' controller. Diane Buswell, is now evaluating several different 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 greater than its benefits Diane has decided to use the following activities and costs to evaluate the methods of assigning overhead. Activities Designing new models Creating and testing prototypes Creating molds for kayaks Cost $128,000 152,000 182,000 Operating oven for the rotomolded kayaks 43,000 Operating the vacuum line for the composite kayaks 31,000 Supervising production employees 192,000 Curing time (the time that is needed for the chemical processes to finish before the next step in the production process; many of these costs are related to the space required in the building) Total 180,000 $908,000 As Diane examines the data, she decides that the cost of operating the oven for the rotomolded 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 assigned with the other costs. For purposes of this analysis, assume that Current Designs uses $236,000 in direct labor costs to produce 1,000 composite kayaks and $320,000 in direct labor costs to produce 4,000 rotomolded kayaks each year.