The Current Designs staff has prepared the annual manufacturing budget for the rotomolded line based on an estimated annual production of 4,000 kayaks during 2017. Each kayak will require 54 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). The polyethylene powder used in these kayaks costs $1.50 per pound, and the finishing kit cost S170 each. Each kayak will use two kinds of labor - 2 hours of type I labor from people who run the oven and trim the plastic, and 3 hours of work from type II workers who attach the hatches and seat and other hardware. The type I employees are paid $15 per hour, and the type II are paid S12 per hour Manufacturing overhead is budgeted at $386,000 for 2017, as follows. Variable costs Indirect materials Manufacturing supplies Maintenance and utilities S40,000 53,800 88,000 181,800 Fixed costs Supervision Insurance Depreciation 80,000 14,400 109,800 204,200 S386,000 Total During the first quarter, ended March 31, 2017, 1,050 units were actually produced with the following costs. Polyethylene powder Finishing kits Type I labor Type II labor Indirect materials Manufacturing supplies Maintenance and utilities Supervision Insurance Depreciation $89,500 178,840 31,500 39,060 10,500 14,150 26,000 20,000 3,600 27,450