Concept explainers
Huegel Hollow Resort has ordered 20 rotomolded kayaks from Current Designs. Each kayak will be formed in the rotomolded oven, cooled, and then the excess plastic trimmed away. Then, the hatches, seat, ropes, and bungees will be attached to the kayak.
Dave Thill, the kayak plant manager, knows that manufacturing each kayak requires 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 kits cost $170 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 $15 per hour, and the type II employees are paid $12 per hour. For purposes of this problem, assume that overhead is allocated to all jobs at a rate of 150% of direct labor costs.
Instructions
Determine the total cost of the Huegel Hollow order and the cost of each individual kayak in the order. Identify costs as direct materials, direct labor, or manufacturing overhead.
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Managerial Accounting: Tools for Business Decision Making
- The Seattle Recycling Company (SRC) purchases old water and soda bottles and recycles them to produce plastic covers for outdoor furniture. The company processes the bottles in a special piece of equipment that first melts, then reforms the plastic into large sheets that are cut to size. The edges from the cut pieces are sold for use as package filler. The filler is considered a byproduct. SRC can produce 25 table covers, 75 chair covers, and 5 pounds of package filler from 100 pounds of bottles. In June, SRC had no beginning inventory. It purchased and processed 120,000 pounds of bottles at a cost of $600,000. SRC sold 25,000 table covers for $12 each, 80,000 chair covers for $8 each, and 5,000 pounds of package filler at $1 per pound.  The accountant for SRC needs to record the information about the joint and byproducts in the general journal, but is not sure what the entries should be. The company has hired you as a consultant to help its accountant. QShow journal entries at the…arrow_forwardThe Seattle Recycling Company (SRC) purchases old water and soda bottles and recycles them to produce plastic covers for outdoor furniture. The company processes the bottles in a special piece of equipment that first melts, then reforms the plastic into large sheets that are cut to size. The edges from the cut pieces are sold for use as package filler. The filler is considered a byproduct. SRC can produce 25 table covers, 75 chair covers, and 5 pounds of package filler from 100 pounds of bottles. In June, SRC had no beginning inventory. It purchased and processed 120,000 pounds of bottles at a cost of $600,000. SRC sold 25,000 table covers for $12 each, 80,000 chair covers for $8 each, and 5,000 pounds of package filler at $1 per pound.  The accountant for SRC needs to record the information about the joint and byproducts in the general journal, but is not sure what the entries should be. The company has hired you as a consultant to help its accountant. QShow journal entries at the…arrow_forwardFrieling Company installs granite countertops in customers' homes. First, the customer chooses the particular granite slab, and then Frieling measures the countertop area at the customer's home, cuts the granite to that shape, and installs it. The Tramel job calls for direct materials of $2,200 and direct labor of $700. Overhead is applied at the rate of 110 percent of direct labor cost. Unfortunately, one small countertop breaks during installation and Frieling must cut another piece and install it to properly complete the job. The additional rework required direct materials costing $700 and direct labor costing $400. Assume that the spoilage was due to carelessness by a Frieling worker and it is considered to be normal spoilage. 2. Make any needed journal entry to the overhead control account. If an amount box does not require an entry, leave it blank. 3. What if the additional rework required $800 of direct labor? What would be the effect on the cost of the Tramel job?arrow_forward
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