Question

Mike Cichanowski founded Wenonah Canoe and later purchased Current Designs, a company that designs and manufactures kayaks. The kayak-manufacturing facility is located just a few minutes from the canoe company's headquarters in Winona, Minnesota. Current Designs makes kayaks using two different processes. The rotational molding process uses high temperature to melt polyethylene powder in a closed rotating metal mold to produce a complete kayak hull and deck in a single piece. These kayaks are less labor-intensive and less expensive for the company to produce and sell. Its other kayaks use the vacuum-bagged composite lamination process (which we will refer to as the composite process). Layers of fiberglass or Kevlar® are carefully placed by hand in a mold and are bonded with resin. Then, a high-pressure vacuum is used to eliminate any excess resin that would otherwise add weight and reduce strength of the finished kayak. These kayaks require a great deal of skilled labor as each boat is individually finished. The exquisite finish of the vacuum-bagged composite kayaks gave rise to Current Designs' tag line, "A work of art, made for life." Current Designs has the following managers: Mike Cichanowski, CEO Diane Buswell, Controller Deb Welch, Purchasing Manager Bill Johnson, Sales Manager Dave Thill, Kayak Plant Manager Rick Thrune, Production Manager for Composite Kayaks

Answer 1

(Amount in $)

Sr No.	Payee	Amount	Product Cost			Period Cost	Reason
			Direct Material	Direct Labour	Manufacturing Overhead
1	Winona Agency	3230	-	-	-	3230	Property Insurance does not attributable to product cost. But it’s a Period Cost.
2	Bill Johnson	1690	-	-	-	1690	Payroll Expense in relation to sales is not attributable to manufacturing overhead.
3	Xcel Energy	460	-	-	460	-	Electricity Expense incurred is consider as Manufacturing Overhead
4	Winona Printing	90	-	-	-	90	Printing Expense in relation to sales is not attributable to manufacturing overhead.
5	Jim Kaiser	1210	-	-	-	1210	Sales commission Expense in relation to sales is not attributable to manufacturing overhead.
6	Dave Thill	1410	-	1410	-	-	Payroll Expense in relation to Production is attributable to Direct Labour Product Cost.
7	Dana Schultz	820		820			Payroll Expense in relation to Production is attributable to Direct Labour Product Cost.
8	Composite One	230	230	-	-	-	It is consider as material used in manufacturing and hence attributable to Direct Material Cost.
9	Fastenal	850	-	-	850	-	Miscellaneous expenses incurred in relation with production can be consider as Manufacturing Overhead
10	Ravago	3380	3380				It is consider as main ingredient used in manufacturing and hence attributable to Direct Material Cost.
11	Winona County	5160	-	-	-	5160	Property Taxes does not attributable to product cost. But it’s a Period Cost.
12	North American Composites	5240	5240	-	-	-	It is consider as ingredient used in manufacturing and hence attributable to Direct Material Cost.
13	Waste Management	630	-	-	-	630	Trash Disposal is not attributable to product cost.
14	None	4650	-	-	-	4650	Depreciation is not attributable to product cost. But it’s a Period Cost.
	Total	29050	8850	2230	1310	16660

Note:

1. Period Cost are cost which can be deferred evenly during the year irrespective of the production made during the year.
2. Sr. No. 2, 4, 5 & 13 cannot be explicitly consider as period cost. But they are indirect cost which are neither directly related with production nor consider as period cost. Since the question does not specify indirect cost column it is mentioned in Period Cost Column.