CD$23$ Current Designs

The executive team at Current Designs has gathered to evaluate the company's operations for the last month.

One of the topics on the agenda is the special order from Huegel Hollow, which was presented in CD$2.$ Recall that

Current Designs had a special order to produce a batch of $20$ kayaks for a client, and you were asked to determine

the cost of the order and the cost per kayak.

Mike Cichanowski asked the others if the special order caused any particular problems in the production process.

Dave Thill, the production manager, made the following comments: "Since we wanted to complete this order quickly

and make a good first impression on this new customer, we had some of our most experienced type I workers run the

rotomold oven and do the trimming. They were very efficient and were able to determine that part of the manufacturing

process even more quickly than the regular crew. However, the finishing on these kayaks required a different technique

than what we usually use, so our type II workers took a little longer than usual for that part of the process."

Deb Welch, who is in charge of the purchasing function, said, $"$We had to pay a little more for the polyethylene

powder for this order because the customer wanted a color that we don't usually stock. We also ordered a little extra

since we wanted to make sure that we had enough to allow us to calibrate the equipment. The calibration was a little

tricky, and we used all of the powder that we had purchased. Since the number of kayaks in the order was fairly small,

we were able to use some rope and other parts that were left over from last year's production in the finishing kits.

We've seen a price increase for these components in the last year, so using the parts that we already had in inventory

cut our costs for the finishing kits."

Instructions

$($a$)$ Based on the comments above, predict whether each of the following variances will be favorable or unfavorable.

If you don't have enough information to make a prediction, use "NEI" to indicate "Not Enough Information."

$(1)$ Quantity variance for polyethylene powder.

$(2)$ Price variance for polyethylene powder.

$(3)$ Quantity variance for finishing kits.

$(4)$ Price variance for finishing kits

$(5)$ Quantity variance for type I workers.

$(6)$ Price variance for type I workers.

$(7)$ Quantity variance for type II workers.

$(8)$ Price variance for type II workers.

$($b$)$ Diane Buswell examined some of the accounting records and reported that Current Designs purchased $1,200$ pounds

of powder for this order at a total cost of $$2,040.$ Twenty $(20)$ finishing kits were assembled at a total cost of $$3,240.$

The payroll records showed that the type I employees worked $38$ hours on this project at a total cost of $$570.$ The

type II finishing employees worked $65$ hours at a total cost of $$796\mathrm{.}25.$ A total of $20$ kayaks were produced for this

order.

The standards that had been developed for this model of kayak were used in CD$2$ and are reproduced here. For

each kayak:

$54$ pounds of polyethylene powder at $$1\mathrm{.}50$ per pound

$1$ finishing kit $($rope$,$ seat, hardware, etc.$)$ at $$170$

$2$ hours of type I labor from people who run the oven and trim the plastic at a standard wage rate of $$15$ per hour

$3$ hours of type II labor from people who attach the hatches and seat and other hardware at a standard wage rate

of $$12$ per hour

Calculate the eight variances that are listed in part $($a$)$ of this problem.

$($a$)$ Based on the comments above, predict whether each of the following variances will be favorable or unfavorable.

If you don't have enough information to make a prediction, use "NEI" to indicate "Not Enough Information."

$*$ See if you can guess based on the given information of standard and actual.

$(1)$ Quantity variance for polyethylene powder.

$(2)$ Price variance for polyethylene powder.

$(3)$ Quantity variance for finishing kits.

$(4)$ Price variance for finishing kits

$(5)$ Quantity variance for type I workers.

$(6)$ Price variance for type I workers.

$(7)$ Quantity variance for type II workers.

$(8)$ Price variance for type II workers.

$($b$)$ Calculate the eight variances that are listed in part $($a$)$ of this problem.

$*$ You must give results favorable or unfavorable or NEI for each $1-8$

$(1)$ Quantity variance for polyethylene powder.

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$(2)$ Price variance for polyethylene powder.

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$(3)$ Quantity variance for finishing kits.

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$(4)$ Price variance for finishing kits

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$(5)$ Quantity variance for type I workers.

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$(6)$ Price variance for type I workers.

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$(7)$ Quantity variance for type II workers.

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$(8)$ Price variance for type II workers. $($Round to $2$ decimal points$)$

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