The executive team at Current Designs has gathered to evaluate the company’s ope
ID: 2521288 • Letter: T
Question
The executive team at Current Designs has gathered to evaluate the company’s operations for the last month. One of the topics on the agenda is a special order to produce a batch of 20 kayaks for a client.
Mike Cichanowski asked the others if the special order caused any particular problems in the production process. Dave Thill, the production manager, made the following comments: “Since we wanted to complete this order quickly and make a good first impression on this new customer, we had some of our most experienced type I workers run the rotomould oven and do the trimming. They were very efficient and were able to complete that part of the manufacturing process even more quickly than the regular crew. However, the finishing on these kayaks required a different technique than what we usually use, so our type II workers took a little longer than usual for that part of the process.”
Deb Welch, who is in charge of the purchasing function, said, “We had to pay a little more for the polyethylene powder for this order because the customer wanted a colour that we don’t usually stock. We also ordered a little extra since we wanted to make sure that we had enough to allow us to calibrate the equipment. The calibration was a little tricky, and we used all of the powder that we had purchased. Since the number of kayaks in the order was fairly small, we were able to use some rope and other parts that were left over from last year’s production in the finishing kits. We’ve seen a price increase for these components in the last year, so using the parts that we already had in inventory cut our costs for the finishing kits.”
Favourable OR Unfavourable OR Not Enough Information
The executive team at Current Designs has gathered to evaluate the company’s operations for the last month. One of the topics on the agenda is a special order to produce a batch of 20 kayaks for a client.
Mike Cichanowski asked the others if the special order caused any particular problems in the production process. Dave Thill, the production manager, made the following comments: “Since we wanted to complete this order quickly and make a good first impression on this new customer, we had some of our most experienced type I workers run the rotomould oven and do the trimming. They were very efficient and were able to complete that part of the manufacturing process even more quickly than the regular crew. However, the finishing on these kayaks required a different technique than what we usually use, so our type II workers took a little longer than usual for that part of the process.”
Deb Welch, who is in charge of the purchasing function, said, “We had to pay a little more for the polyethylene powder for this order because the customer wanted a colour that we don’t usually stock. We also ordered a little extra since we wanted to make sure that we had enough to allow us to calibrate the equipment. The calibration was a little tricky, and we used all of the powder that we had purchased. Since the number of kayaks in the order was fairly small, we were able to use some rope and other parts that were left over from last year’s production in the finishing kits. We’ve seen a price increase for these components in the last year, so using the parts that we already had in inventory cut our costs for the finishing kits.”
Explanation / Answer
1 Quantity variance for polyethylene powder. Unfavourable Favourable OR Unfavourable OR Not Enough Information 2 Price variance for polyethylene powder. Unfavourable Favourable OR Unfavourable OR Not Enough Information 3 Quantity variance for finishing kits. Not Enough Information Favourable OR Unfavourable OR Not Enough Information 4 Price variance for finishing kits. Favourable Favourable OR Unfavourable OR Not Enough Information 5 Quantity variance for type I workers. Favourable Favourable OR Unfavourable OR Not Enough Information 6 Price variance for type I workers. Not Enough Information Favourable OR Unfavourable OR Not Enough Information 7 Quantity variance for type II workers. Unfavourable Favourable OR Unfavourable OR Not Enough Information 8 Price variance for type II workers. Not Enough Information Favourable OR Unfavourable OR Not Enough Information Acctual Standard Data of Varriance Units Total Cost Units Rate Total Cost Total Cost per Batch) Pellets 1110 2997 50 2.25 112.5 2250 Asembly 20 3180 164 3280 Type 1 58 812 3 14 42 840 Type 2 88 990 4 11 44 880 Quantity variance for polyethylene powder ((50*20)-1110)*2.25 -247.5 Unfavourable Price variance for polyethylene powder (2.25-(2997/1110))*1110 -499.5 Unfavourable Quantity variance for finishing kits 0 Neither Price variance for finishing kits 3180-3280 -100 Unfavourable Quantity variance for type I workers ((3*20)-58)*14 28 favourable Price variance for type I workers (812/58-14)*58 0 Neither Quantity variance for type II workers (4*20-88)*11 -88 Unfavourable Price variance for type II workers (11-(990/88))*88 -22 Unfavourable
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