Kayak Aqua Sports Company is a producer of aquatic equipment in Malibu Beach, California, USA. Inventory data from its most recently concluded year of operations 2021 at 5,000 units of production were as follows: Raw materials, Beginning $25,000 Raw materials, Ending $10,000 Work in process, Beginning $45,000 Work in process, Ending $20,000 Finished goods, Beginning $100,000 Finished goods, Ending $85,000 Direct labor was determined to be $450,000; indirect labor (fixed) $60,000; and supervisors in the factory earns $50,000 (fixed) annually. General and administrative expenses represent salaries of executives and management totaling $110,000. Total sales reached $1,500,000 where commissions of 8% were paid to salespersons. Prime costs were generally deemed variable. Further ledger details were provided by the company bookkeeper: Purchases of raw materials (all direct) $150,000 Indirect materials (variable) $ 5,000 Maintenance in the factory $30,000 Supplies in the factory (variable) $3,000 Supplies in the office (fixed) $5,000 Depreciation of factory equipment (straight line) $18,000 Depreciation office equipment (straight line) $12,000 As part of its compensation package, the company provides meal tickets to its employees and factory workers. This is a fixed amount annually allocated as follows: factory workers $20,000 and office workers $2,000. Due to its shared facilities between the factory and the office, utilities, insurance and rent are allocated on a reasonable basis. It was determined that 95% of the $100,000 total utilities goes to factory operations and the remaining 5% chargeable to the office. Likewise, the fixed insurance policy for the property amounting to $80,000 is split 80% for the factory and 20% for the office. Rent is fixed at $150,000 and 80% based on floor area is allocated to the factory and the remaining 20% for the office. Looking into operating expenses at its current operating capacity, all the expenses were determined to be fixed except for the sales commission. Based on earlier experience at production level of 9,000 units, maintenance costs (mixed) were determined to be $36,000 while utilities costs (mixed) in the factory were recorded at $103,000. This is the highest activity level planned and currently the company is at its lowest production level of 5,000 due to the effect of the pandemic. For decision making purposes, this was determined as the companys relevant range.

Required: Compute the following at the current level of 5,000 production units: 1. Total manufacturing overhead 2. Manufacturing cost 3. Cost of goods manufactured 4. Cost of goods available for sale 5. Gross profit 6. Operating Expenses 7. Net operating income Compute the following after considering a high-low cost segregation analysis 8. Manufacturing overhead total variable cost rate per unit (slope) 9. Manufacturing overhead total fixed cost (intercept) If management plans to manufacture 7,500 units next year compute the following: 10. Total cost of maintenance in the factory 11. Total cost of utilities in the factory If management plans to manufacture at 6,000 units next year compute the following: 12. Total manufacturing overhead 13. Total manufacturing overhead at 8,000 units of production. Breakeven analysis 14. Compute the break-even point in units 15. Compute the break-even point in $ sales 16. Compute the target sales in $ to reach a profit of $100,000 17. Compute the target sales in units to reach a profit of $200,000 Cost Volume Profit Analysis (assume question 18 to 20 as independent scenarios). 18. Assume the current 5,000 level of production and management wishes to increase it selling price of 10%; the market is price sensitive, the volume will decrease by 5%. How much is the expected net operating income? 19. Management thinks increasing establishing a fixed advertising budget of $100,000 will increase current sales level by 10%. Compute the expected net income. 20. Management plans to increase selling price by 10% due to uncontrollable rising production costs. However, the market is price sensitive so there will be an expected volume decrease of 5%. The cost controller thinks variable manufacturing costs can be lowered by 5%. How much is the expected net operating income

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