Crane Hollow Resort has ordered 22 rotomolded kayaks from Current Designs. Each kayakwill be formed in the rotomolded oven, cooled, and then have the excess plastic trimmed away. Then, thehatches, seat, ropes, and bungees will be attached to the kayak. Dave Thill, the kayak plant manager, knows that manufacturing each kayak requires 50 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). The polyethylene powder used in these kayaks costs $1.5 per pound, and the finishing kits cost $152 each. Each kayak will use two kinds of labor: 2 hours of more-skilled type I labor from people who run the oven and trim the plastic, and 3 hours of less-skilled type II labor from people who attach the hatches and seat and other hardware. The type I employees are paid $16 per hour, and the type II employees are paid $12 per hour. For purposes of this problem, assume that overhead is applied to all jobs at a rate of 150% of direct labor costs. Determine the total cost of the Crane Hollow order and the cost of each individual kayak in the order. Identify costs as direct materials, direct labor, or manufacturing overhead.

Crane Hollow Resort has ordered 22 rotomolded kayaks from Current Designs. Each kayakwill be formed in the rotomolded oven, cooled, and then have the excess plastic trimmed away. Then, thehatches, seat, ropes, and bungees will be attached to the kayak. Dave Thill, the kayak plant manager, knows that manufacturing each kayak requires 50 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). The polyethylene powder used in these kayaks costs $1.5 per pound, and the finishing kits cost $152 each. Each kayak will use two kinds of labor: 2 hours of more-skilled type I labor from people who run the oven and trim the plastic, and 3 hours of less-skilled type II labor from people who attach the hatches and seat and other hardware. The type I employees are paid $16 per hour, and the type II employees are paid $12 per hour. For purposes of this problem, assume that overhead is applied to all jobs at a rate of 150% of direct labor costs. Determine the total cost of the Crane Hollow order and the cost of each individual kayak in the order. Identify costs as direct materials, direct labor, or manufacturing overhead.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 11PA: Quality Clothing, Inc., produces skorts and jumper uniforms for schoolchildren. In the process of...

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Crane Hollow Resort has ordered 22 rotomolded kayaks from Current Designs. Each kayakwill be formed in the rotomolded oven,
cooled, and then have the excess plastic trimmed away. Then, thehatches, seat, ropes, and bungees will be attached to the kayak.
Dave Thill, the kayak plant manager, knows that manufacturing each kayak requires 50 pounds of polyethylene powder and a finishing
kit (rope, seat, hardware, etc.). The polyethylene powder used in these kayaks costs $1.5 per pound, and the finishing kits cost $152
each. Each kayak will use two kinds of labor: 2 hours of more-skilled type I labor from people who run the oven and trim the plastic, and
3 hours of less-skilled type II labor from people who attach the hatches and seat and other hardware. The type I employees are paid
$16 per hour, and the type II employees are paid $12 per hour. For purposes of this problem, assume that overhead is applied to all jobs
at a rate of 150% of direct labor costs.
Determine the total cost of the Crane Hollow order and the cost of each individual kayak in the order. Identify costs as direct
materials, direct labor, or manufacturing overhead.
Direct Materials
Polyethylene powder
Finishing kit
Direct labor
More skilled
Less skilled
Manufacturing overhead
Total cost for one kayak
Total cost of the order
$
$
$

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