If the company adds the molded door line, should ABC be considered? Why? Fully discuss all pertinent points and show calculations needed to support your answers.

Play and Stay Manufacturing(P&S) has a factory that produces cabinetry for the RV and marine market. The company has other product lines. Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs The following information highlights P&S Manufacturing's cost structure for 2020.

The materials include $2,800 for the wood and other materials on a per job basis.

It requires 24 hours of labor on average for the cabinetry. The hourly rate is $11.

The sales price will be set at a markup of 80%.

The company estimates that it will have 43,200 direct labor hours in total for the cabinets.

It assumes 1800 units are sold on average per year.

A breakdown of estimated yearly costs related to the cabinetry follows:

Salaries- office & administrative $ 500,000

Salaries for factory personal $ 350,000

Office Rent $ 150,000

Factory Rent $ 30,000

Office utilities and Misc office expenses(based on units sold) $ 15,000

Sales travel(based on units sold) $ 24,000

Insurance - office $ 12,000

Depreciation - office equipment $ 40,000

Depreciation for factory equipment $ 70,000

Advertising $ 20,000

Sales commissions(based on units sold) $ 50,000

Factory Property taxes $ 25,000

Maintenance for factory equipment $ 80,000

Related question:

Assuming P&S Manufacturing is considering adding another product line - molded doors (keeping the cabinet production constant at 1,800 units). How many units should the company sell to make adding the additional line economically feasible/attractive? Adding this line will require hiring a different type of worker which costs the company $15/hour. P&S Manufacturing estimated each unit takes 10 hours of labor, and $850 direct materials. This line is estimated to incur additional fixed MOH $425,000 for the year, and variable costs/expenses per unit are the same as the cabinet product line. This product line does not add additional fixed period costs, but shares the fixed period costs with the cabinetry line. The company estimated sales price of a set of doors would be $1,850.

The materials cost per unit	850	$/unit
Average direct labor hour for the cabinetry	10	DLH/unit
Direct labor hourly rate	$15	/DLH
MOH	$425,000	/year
Sales price	$1,850	/unit

My answer:3,675

	Cabinet	Molded door	Total
Sales (units)	1,800	3,675
Sales (dollar)	$10,926,360	$6,798,645	$17,725,005
Variable expenses
Direct labor cost	$475,200	$551,241	$1,026,441
Direct materials cost	$5,040,000	$3,123,702	$8,163,702
Variable administrative expenses	$89,000	$181,706	$270,706
Total variacble cost	$5,604,200	$3,856,649	$9,460,849
Contribution margin	$5,322,160	$2,941,996	$8,264,157
	49%	43%	47%
Fixed costs
Manufacturing overhead	$555,000	$425,000	$980,000
Administrative salaries	$500,000		$500,000
Insurance	$12,000		$12,000
Depreciation	$40,000		$40,000
Advertising	$20,000		$20,000
Office rent	$150,000		$150,000
Total fixed costs	$1,277,000	$425,000	$1,702,000
Operating income	$4,045,160	$2,516,996	$6,562,156
Operating income margin%	37.0%	37.0%	37.0%
Target additional operating income	$685
Estimated MOH cost per unit	$116
Target units		3,675

If I want to answer that it is better to adopt ABC, it would be helpful if you could tell me the calculations that support the answer.