KiteSurfRUs profitability
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Please review the attachment, read carefully and answer the following five questions. When answering the five questions, please be sure to explain how you got the answer.
1. Calculate the manufacturing overhead rate based on labor hours and machine hours.
2. Determine the cost to manufacturing one unit of each model using two different traditional approaches; direct labor hours and machine hours.
3. Determine the cost to manufacturing one unit of each model using the activity-based costing data presented above.
4. Is the kite surf kit as profitable as the company may think it is based on its present system?
5. What should KiteSurfRUs Company do to improve its profitability?
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Solution Summary
This solution helps with a problem involving activity-based costing.
Solution Preview
Please see the attached file.
Kite Surf Kit Professional Board
Sales and production (units) 1200 800
Sales Price $980.00 $650.00
Labor Hours required per unit 6 9
Machine Hour required per unit 5 7
Unit Costs:
Direct Material $209.00 $255.00
Direct Labor $85.00 $85.00
Variable Overhead $70.00 $90.00
Cost Pool Cost Driver Total Amount Kite Surf ...
Education
- BE, Bangalore University, India
- MS, University of Wisconsin-Madison
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