i think i got the numbers wrong in the accept order category.

9 CURRENT DESIGNS Current Designs faces a number of important decisions that require incremental analysis. Consider each of the following situations independently. 1 17 Situation 1 Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating coolers for a promotion his company was planning. These coolers resemble a kayak but are about one-third the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip. The company would be interested in purchasing 180 coolers for the upcoming summer. It is willing to pay $450 per cooler. The brewing company would pick up the coolers upon completion of the order. Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce the coolers. After careful analysis, the following costs were identified. 19 Direct materials Direct labor $144/unit $108/unit Variable overhead Fixed overhead $36/unit $1,800 Current Designs would be able to modify an existing mold to produce the coolers. The cost of these modifications would be approximately $3,600. Instructions 30(a) Prepare an incremental analysis to determine whether Current Designs should accept this special order to 31 produce the coolers. 32(b) Discuss additonal factors that Mike and Diane should consider if Current Designs is currently operating at 33 | full capacity. ACC3020 Droid 35 36 37 39 40 41 A B C F G H Situation 2 Current Designs is always working to identify ways to increase efficiency while becoming more environmentally conscious. During a recent brainstorming session, one employee suggested to Diane Buswell, controller, that the company should consider replacing the current rotomold oven as a way to realize savings from reduced energy consumption. The oven operates on natural gas, using 30,600 therms of natural gas for an entire year. A new, Jenergy-efficient rotomold oven would operate on 27,000 therms of natural gas for an entire year. After seeking out price quotes from a few suppliers, Diane determined that it would cost approximately $450,000 to purchase a new, energy-efficient rotomold oven. She determines that the expected useful life of the new oven would be 8 years, and it would have no salvage value at the end of its useful life. Current Designs would be able to sell the current oven for $18,000 43 45 46 Instructions 47 la Prepare an incremental analysis to determine if Current signs should purchase the new rotomold oven, 48 assuming that the average price for natural gas over the next 8 years will be $0.78 per therm. 49 (b) Diane is concerned that natural gas prices might increase at a faster rate over the next 8 years. If the company projects that the average natural gas price of the next 8 years could be as high as $1.02 per therm, discuss how that might change your conclusion in (a). 51 56 LAB . 53 Situation 3 54 One of Current Designs' competitive advantages is found in the ingenuity of its owners and CEO, Mike Cichanowski. His 55 involvement in the design of kayak molds and production techniques has led to Current Designs being recognized as an industry leader in the design and production of kayaks. This ingenuity was evident in an improved design of one of the 57 most important component of a kayak, the seat. The "Revolution Seating System" is one-of-a-kind, rotating axis seat that gives unmatched, full contact, under-leg support. It is quickly adjustable with a lever-lock system that allows for a 59 customizable seat position that maximizes comfort for the rider. Having just designed the "Revolution Seating System", Current Designs must now decide whether to produce the seats 51 internally or buy them from an outside supplier. The costs for Current Designs to produce the seats are as follows. Direct materials Variable overhead $36/unit $27/unit Direct labor Fixed overhead | $21.60/unit $36,000 66 Current Designs will need to produce 5,400 seats this year, 25% of the fixed overhead will be avoided if the seats are purchased from an outside vendor. After soliciting prices from outside suppliers, the company determined that it will 168 cost $90 to purchase a seat from an outside vendor. 59 70 Instructions I 71 (0) Prepare an incremental analysis showing whether Current Designs should make or buy the "Revolution Seating System." 73 (b) Would your answer in (a) change if the productive capacity released by not making the seats could be used to produce income of $36,000? 75 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". 72 74 77 28 BO Situation 1 (a Prepare an incremental analysis to determine whether Current Designs should accept this special order to produce the coolers. Net Income Reject Order Accept Order | Increase (Decrease) Revenues $81,000.00 Costs: Direct materials $25,920.00 Direct labor $19,440.00 Variable overhead $6,480.00 Fixed overhead $1,800.00 Cost to modify existing mold $3,600.00 Total costs $57,240.00 Net Income $23,760.00 $23,760.00 Based solely on financial considerations, Current Designs should indicate by placing an "X" in the appropriate cell below) Reject Accept X 8 Points Response: 3 Situation 2 Slla Prepare an incremental analysis to determine if Current Designs should purchase the new rotomold oven, assuming that the average price for natural gas over the next 8 years will be $0.52 per therm. Replace Oven Retain Oven $190,944.00 Net Income Increase (Decrease) $168,480.00 I AM Variable mfg costs New oven costs Proceed from scrapping old oven Total $450,000.00 $18,000.00 $60*80.00 $190,944.00 $409,536.00 Based solely on financial considerations, Current Designs should indicate by placing an in the appropriate cell below) Retain Replace 8 Points Response: 132 36 L 33 34 Situation 2 35 (6) Diane is concerned that natural gas prices might Increase at a faster rate over the next 8 years. If the company projects that the average natural gas price of the next 8 years could be as high as $0.68 per therm, discuss 37 how that might change your conclusion in (a). 138 Net Income Retain Oven Replace Oven Increase (Decrease) Variable mfg. costs 142 New oven costs Proceed from scrapping old oven Total 145 143 BE Based solely on financial considerations, Current Designs should indicate by placing an X" in the appropriate cell below) Retain Replace & Points Response 150 151 152 153 G H Situation 3 la Prepare an incremental analysis showing whether Current Designs should make or buy the "Revolution Seating System." Make Net Income Increase (Decrease) - Direct materials Direct labor Variable mfg. costs Fixed mfg. costs Purchase price Total annual cost Based solely on financial considerations, Current Designs should (Indicate by placing an "X" in the appropriate cell below Make Buy 8 Points In Response minn Situation3_ Oll(b) Would your answer in (a) change if the productive capacity released by not making the seats could be used to produce income of $24,000? Make Net Income Increase (Decrease) Bus Total annual cost Opportunity cost Total cost Based solely on financial considerations, Current Designs should indicate by placing an in the appropriate cell below) Buy 90 911 Points Response