You have recently been appointed as a senior accountant at an automobile company. You notice that no one has created method to apply overhead to the products, and they are currently being sold without this value added to them. Currently all overhead is considered an administrative expense on the profit/loss statement as they aren't sure which product to apply it to. Understanding that this has an impact on reporting, and decision making, you have decided to implement a method of traditional based costing. You're pretty sure that using job costing is the way to go. From what you've been told by your support staff, the amount to tires used is a good indicator of how much overhead relates to that product. Of the overhead applied, approximately 30% is variable. For the direct materials, approximately 40% is variable, while only 10% of the direct labour is considered variable. The market is infinite and will accept as many vehicles as you are willing to produce.

1)How many units, of each product, do you need to produce in order to make a profit of $500. Provide support. (60)

You have now been approached by a consultant who claims that they can increase your sales of each product by 20% if you are willing to pay them $300 each year.

2) Is this a good idea, why? Provide support. (25)

3) What is the new break even in dollars? Provide support. 15

PLEASE SOLVE QUESTION 2 AS PER THE EXCEL SHEET ATTACHED..

E AssignmentTemplate Revised [Protected View] , Excel File Home Insert Page Layout Formulas Data Review View Help 9 Tell me what you want to do 0 PROTECTED VIEW Be carefulifiles from the Internet can contain viruses Unless you need to edit, it's safer to stay in Protected View. Enable Editing A3 ' E r Estimated Activity A A ' B 1 C 1 D 1 E | F l G l H l | 1 J l K 1 L l M 1 N l 0 1 1 Question 1 2 3 I Estimated Activity 4 I Fast Slow Kinda Slow MOH151 57 Tires 33 34 13 82 67 Doors 24 16 20 38 7 E Acutal 9 1? DM (5) 10 13 15 11 DL (5) 12 14 16 F MOH E Total 14 1? Price (5) 4o 50 60 1? Tires Used 12 33 14 1E Doors Used 18 22 34 18 1? Target Prot 2? Consultant Costs 21 Fast Slow Kinda Slow 22 Current Units Sold Before Your Arrival 10 20 30 23 2? Fast Slow Kinda Slow 2? Price per model 2? Less variable expenses: 27 DM 2? DL 5 MOH 30 Total Variable Costs 31 Contribution margin per model sheets 5 11: Ready Assignment Template Revised [Protected View] - Excel File Home Insert Page Layout Formulas Data Review View Help Tell me what you want to do PROTECTED VIEW Be careful-files from the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing A3 ! X V fx Estimated Activity A B D E F G H I J K L M N 29 MOH 30 Total Variable Costs 31 Contribution margin per model 32 Fast Slow Kinda Slow 33 FC 34 DM 35 DL 36 MOH 37 Total 38 39 Overall Cash Required 40 41 Fast Slow Kinda Slow 42 Breakeven in Units 43 44 Question 2 45 46 Price Change 47 Price Per Model 48 Less variable expenses: 49 Contribution margin per model 50 51 Revised Cash Requied 52 53 Breakeven in Units 54 Breakeven in Sales 55 56 Good Idea? Why 57 58 59 Sheet3 +