Wolanin Containers currently uses a recycled plastic to make bottles for the food industry.

The variable manufacturing overhead rate is based on a total estimated variable manufacturing overhead of $ 300,000 and estimated total DLH of 10,000. Wolanin allocates its variable manufacturing overhead based on direct labor hours (DLH).

Requirement 1. Calculate the standard cost per batch of 10,000 bottles using the current data (before the company makes any changes). Include direct materials, direct labor, and variable manufacturing overhead (MOH) in the standard cost per unit.

Requirement 2. Calculate the standard cost per batch of 10 comma 000 bottles if the company makes the changes to the bottle design and production process so that less plastic is used. Include direct materials, direct labor, and variable manufacturing overhead in the standard cost per unit. (Round interim calculations to two decimal places and the final answers to the nearest whole dollar.)

Requirement 3. Calculate the cost savings per batch by comparing the standard cost per batch under each scenario (current versus proposed change). (Enter the answer as a positive number rounded to the nearest whole dollar.)

Choices:

Current bottle production information: The cost and time standards per batch of 10,000 bottles are as follows: Plastic 280 kilograms at $11.00 per kg Direct labor 6.0 hours at $15.00 per hour Proposed changes to bottle design and production process: The container division manager is considering having both the bottle redesigned and the bottle production process reengineered so that the plastic usage would drop by 30% overall due both to generating less scrap in the manufacturing process and using less plastic in each bottle. In addition to decreasing the amount of plastic used in producing the bottles, the additional following benefits would be realized: a. Direct labor hours would be reduced by 20% because less scrap would be handled in the production process. b. Total estimated variable manufacturing overhead would be reduced by 10% because less scrap would need to be hauled away, less electricity would be used in the production process, and less inventory would need to be stocked. Manufacturing cost Standard cost per batch Direct materials Direct labor Variable MOH Total standard cost Manufacturing cost Standard cost per batch Direct materials Direct labor Variable MOH Total standard cost The cost savings per batch is $ Assume that the total cost to implement the changes would be $384,000. How many batches of bottles would need to be produced after the changes to have the cost savings total equal the cost to make these changes? First select the formula to compute the number of batches to recoup the cost of implementing the change, then compute the number of batches. (Round all amounts to the nearest whole number.) Number of batches to = recoup cost of implementing Requirement 4. What other benefits might arise from making this change to using less plastic in the manufacture of the bottles? Are there any risks? The company will recognize cost savings once batches have been produced. Not only will the company reap financial The company faces the risk that benefits, but also the company First select the formula to compute the number of batches to recoup the cost of implementing the change, then compute the number of batches. (Round all amounts to the nearest whole number.) Number of batches to = recoup cost of implementing from making this change to using less plastic in the manufacture of the bottles? Are there any risks? Cost savings per batch Estimated total direct labor hours Total bottles per batch Total cost to implement the change Total standard cost Total variable manufacturing overhead batches have been produced. Not only will the company reap financial The company faces the risk that The company will recognize cost savings once benefits, but also the company will Choose from any list or enter any nu be fulfilling sustainable business objectives. improve employee morale due to increases in direct labor. improve the quality of the product. Requirement 4. What other benefits might arise from making this change to using less plastic in the manufacture of the bottles? Are there any risks? The company will recognize cost savings once benefits, but also the company will the projected figures will be incorrect and therefore will not realize the estimated cost savings. they will lose customers due to increased prices