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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.

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.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
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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 $ $ $
Transcribed Image Text: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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