Kayak corporation manufactures two types of kayak -Ocean and fishing- and applies manufacturing overhead too all units using machine hours.

OCEAN FISHING

Anticipated volume (units) 58,500 31,200

Direct-material cost pre unit $50 $70

Direct- labor cost per unit 52 62

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 on setups, machine hours, and purchase orders, which are the activities' three respective cost drivers, follow :

OCEAN KAYAK

Setups 176 136

Machine hours 62400 87500

Purchase orders 200 150

The firm's total overhead is: $ 23,423,400

It is subdivided as follows : manufacturing setups : $5,110,560

machine processing $14,054,040

purchase orders $ 4,258,800

EXCEL QUESTIONS , PLEASE EXPLAIN THROUGH FORMULAS

1. COMPUTE THE PER UNIT TOTAL MANUFACTURING COST OF OCEAN AND FISHING KAYAKS BY USING THE COMPANY'S CURRENT OVERHEADCOSTING PROCEDURES WITH MACHINE HOURS.

2.COMPUTE THE PER UNIT TOTAL MANUFACTURING COST OF OCEAN AND FISHING KAYAKS BY USING ACTIVITY BASED COSTING

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 VOLUME ACCURATE ?

4. IF THE COMPANY WANTS A 25 %MARKUP, DETERMINE PRICE. ASSUME COMPETITORS ARE SELLING THE KAYAKSFOR $400 AND $600 FOR OCEAN AND FISHING KAYAKS RESPECTIVELY

5. WHICH METHOD SHOULD THE COMPANY USE AND WHY. LIST 3 REASONS ..