The Oldtown Clock Company makes walnut veneer clocks that look like antiques. A new clock to be manufactured requires a veneer strip 6 inches wide and 18 inches long.

Oldtown’s supplier of walnut veneer will sell veneer in 6-inch-wide strips that are 8 feet long for $12.50 per strip. The supplier is also willing to sell Oldtown 6-inch-wide strips in 6-foot lengths at a price of $9.60 per strip.

The veneer strips must be carefully cut by hand into 18-inch lengths in Oldtown’s cutting department. Each 6-inch cut across the strip should take 3 minutes. Direct labor rates in the cutting department are $8.00 per hour. No other manufacturing costs are affected by the company’s choice of buying 6- or 8-foot strips. The odd-sized pieces of veneer that are left after cutting have no value.

Required: (1) Assuming the veneer strips are purchased in 6-foot lengths, compute the expected direct materials cost of the veneer and the expected direct labor cost that would be incurred per clock in the cutting department.

(2) Assuming the veneer strips are purchased in 8-foot lengths, compute the expected direct materials cost of the veneer and the expected direct labor cost that would be incurred per clock in the cutting department.

Considering your answers to (1) and (2), should Oldtown purchase the veneer strips in 6- or 8-foot lengths?

Assuming the veneer strips are purchased in 6-foot lengths, determine (for the veneer strips and for veneer cutting operations) the following:

(a) the direct materials quantity standard (in feet per clock);

(b) the direct materials price standard per foot; and

(c) the direct labor quantity standard (in hours per clock).

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