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Nike Inc. produces two types of sports shoes, Running Shoes and Basketball Shoes. The following cost data is available: Cost Item Running Shoes Basketball Shoes
Nike Inc. produces two types of sports shoes, Running Shoes and Basketball Shoes. The following cost data is available:
Cost Item | Running Shoes | Basketball Shoes |
Direct Material | $50/unit | $70/unit |
Direct Labor | $20/unit | $30/unit |
Overhead | 180% of direct labor cost | 160% of direct labor cost |
Additional Information:
- Production for Running Shoes: 500,000 units
- Production for Basketball Shoes: 300,000 units
Requirements:
- Calculate the total cost for Running Shoes and Basketball Shoes.
- Determine the cost per unit for each type of shoe.
- Prepare a cost sheet for both types of shoes.
- Compare the cost structures and suggest which type of shoe is more cost-effective.
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