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:

1. Compute the total manufacturing cost for each product line.
2. Determine the overhead costs applied to each line.
3. Prepare a cost sheet for each product line.
4. 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.
5. Discuss the cost structure and its impact on product pricing and profitability.