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Nike Inc. has the following production costs for its product lines: Air Max, Air Jordan, and Converse: Air Max: Direct Materials: $10,000,000 Direct Labor: $5,000,000
Nike Inc. has the following production costs for its product lines: Air Max, Air Jordan, and Converse:
- Air Max:
- Direct Materials: $10,000,000
- Direct Labor: $5,000,000
- Overhead Rate: 160%
- Air Jordan:
- Direct Materials: $12,000,000
- Direct Labor: $6,000,000
- Overhead Rate: 160%
- Converse:
- Direct Materials: $8,000,000
- Direct Labor: $4,000,000
- Overhead Rate: 160%
Requirements:
- Compute the total manufacturing cost for each product line.
- Determine the overhead costs applied to each line.
- Prepare a cost sheet for each product line.
- Calculate the cost per unit if 500,000 pairs of Air Max, 300,000 pairs of Air Jordan, and 200,000 pairs of Converse were produced.
- Discuss the cost structure and its impact on product pricing and profitability.
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