The Summit Manufacturing Company produces two products. One is a recreational wh

Question

The Summit Manufacturing Company produces two products. One is a recreational white- water kavak moulded from plastic and designed to perform as a durable white-water play boat The other product is a high-performance competition kayak moulded with high-tech fibreglass materials that are very light. The recreation boat is uniform in its dimensions and stvle. Whereas the competition boat is custom designed to fit the individual (e.g. rocker and cockpit size are adjusted) Most of the sales come from the recreation boat, but recently sales of the competition boat have been increasing. The following information is related to the products for the most recent year. Recreation Kavak 900 Competition Kavak Sales and production (number of boats) Sales price per boat Unit costs: 100 660 S 600 Direct materials Direct labour S 150 S 100 S 200 S 100 The books of the company also show that over the past year, Summit incurred the following overhead costs; Building depreciation Equipment depreciation Materials ordering Quality Control Maintenance & security Setup and drafting Supervision Total S 25,000 25,000 15,000 10,000 10,000 20,000 30,000 S 135,000 Summit is presently using a traditional cost system for allocating overheads (i.e. it uses direct labour as the basis for assigning the costs) (a)Using Summit's traditional approach, calculate the profit the company assumes it is making on each recreational kayak and competition kayak

Explanation / Answer

Classical theory of employment works based on the say's law supply creates its own demand; simple words under closed economy full employment situations there cannot exist over productions and oversupply because the theory assumes that whatever produced in the market automatically consumed and exchanged example producer produces the goods sold in the market the goods are purchased by the same labours, similarly over productions also not possible if whatever saved money producer will invest in the economy hence general overproduction not possible; whatever goods supplied in the automatically sold(demand) in the market

However, this view has been challenged by the J M Keynes he gave much emphasis on the demand side of the problems of the economy, says law works on perfect situations which generally doesn't exist hence Keynes theory is more realistic theory than the says law of market theory.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.