BYP1-1 Mike Cichanowski founded Wenonah Canoe and later purchased Current Designs, a com- pany 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. (See www.cdkayak.com/ craftsmanship/index.php for the details of each method.) 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

Instructions

(a)  What are the primary information needs of each manager?

(b)  Name one special-purpose management accounting report that could be designed for each manager. Include the name of the report, the information it would contain, and how frequently it should be issued.

(c)   When Diane Buswell, controller for Current Designs, reviewed the accounting records for a recent period, she noted the following items. Classify each item as a product cost or a period cost. If an item is a product cost, note if it is a direct materials, direct labor, or manufacturing overhead item.

 

Payee	Purpose	Product Costs			Period Costs
		Direct Materials	Direct Labor	Manufacturing Overhead
Winona Agency	Property insurance for the manufacturing plant
Bill Johnson (sales manager)	Payroll check—payment to sales manager
Xcel Energy	Electricity for manufacturing plant
Winona Printing	Price lists for salespeople
Jim Kaiser (sales representative)	Sales commissions
Dave Thill (plant manager)	Payroll check—payment to plant manager
Dana Schultz (kayak assembler)	Payroll check—payment to kayak assembler
Composite One	Bagging film used when kayaks are assembled; it is discarded after use
Fastenal	Shop supplies—brooms, paper towels, etc.
Ravago	Polyethylene powder which is the main ingredient for the rotational molded kayaks
Winona County	Property taxes on manufacturing plant
North American Composites	Kevlar® fabric for composite kayaks
Waste Management	Trash disposal for the company office building
None	Journal entry to record depreciation of manufacturing equipment