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. Current Designs had a special order to produce a batch of 75 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) Diane Buswell examined some of the accounting records and reported the following actual activity for Huegel Hollow order: Pounds of polyethylene powder 4,500 purchased # of Finishing kits assembled Type I labor hours 143 Type il labor hours 75 (a) Diane Buswell examined some of the accounting records and reported the following actual activity for Huegel Hollow order: Pounds of polyethylene powder 4,500 purchased # of Finishing kits assembled 75 Type I labor hours 143 Type il labor hours 244 Cost of polyethylene purchases $7,650.00 Cost of assembling finishing kits $12,150.00 Total type 1 labor cost $2,137.50 Total type il labor cost $2,985.94 Number of units produced 75 The standards that had been developed for each unit of this model of kayak are as follows: Pounds of polyethylene powder Finishing kits Type I labor hours Type II labor hours Cost of polyethylene powder per pound Cost of finishing each kit Type I labor rate per hour Type II labor rate per hour $1.88 $212.50 $18.75 $15.00 - . LELII..... Cdiluide lile TUNTUwing Valldlices TUI LITS Pluulen. Muildle rdvuldule UI UTIVUI due () NOTE: Enter a number in cells requesting a value; enter either a formula in cells with a "?". Calculate the following variances for this problem. Indicate Favorable (F) or Unfavorable (U). 5 points ea (1) Quantity variance for polyethylene powder. AQX SP Value x Value SQ X SP Value X Value = ? (AQ X SP) - (SQ X SP) For U 5 points (2) Price variance for polyethylene powder. AQXAP Value Value XL X SP AQ Value (AQ X AP) Value (AQ X SP) - For U 5 points 1 ..-- ...- ---- -1 ? (3) Quantity variance for finishing kits. AQ X SP Value x Value = SQ X SP Value X Value (AQ X SP) - (SQ X SP) For U 5 points = ? (4) Price variance for finishing kits AQ X AP Value X Value AQX SP Value Value (AQ X AP) - (AQ X SP) For U 5 points (5) Quantity variance for type I workers. AH X SR Value X Value SH Value X Value = SR ? SH Value (AH X SR) X X - SR Value (SH X SR) For U 5 poi 16) Price variance for type I workers. AH X AR Value x Value AH X SR Value X Value = (AH X AR) - (AH X SR) For U 5 poi ? 7) Quantity variance for type II workers. AH X SR Value x Value = SH X SR Value x Value = (AH X SR) - (SH X SR) ? For U 5 poi = Value (AH X SR) Value (SH X SR) - For U 5 points (8) Price variance for type II workers. AH Value X Value = X AR X SR AH Value (AH X AR) X - Value (AH X SR) For U 5 points
