The original questions are (i've already completed them)...

CD7 EXCEL Tutorial

CURRENT DESIGNS

Current Designs faces a number of important decisions that require incremental analysis. Consider each

of the following situations independently.

Situation 1

Recently, Mike Cichanowski, owner and CEO of Current Designs, received a phone call from the president

of a brewing company. He was calling to inquire about the possibility of Current Designs producing "floating

coolers" for a promotion his company was planning. These coolers resemble a kayak but are about one-third

the size. They are used to float food and beverages while paddling down the river on a weekend leisure trip.

The company would be interest in purchasing 100 coolers for the upcoming summer. It is willing to pay $250

per cooler. The brewing company would pick up the coolers upon completion of the order.

Mike met with Diane Buswell, controller, to identify how much it would cost Current Designs to produce

the coolers. After careful analysis, the following costs were identified.

Direct materials

$80/unit

Variable overhead

$20/unit

Direct labor

$60/unit

Fixed overhead

$1,000

Current Designs would be able to modify an existing mold to produce the coolers. The cost of these

modifications would be approximately $2,000.

Instructions

(a)

Prepare an incremental analysis to determine whether Current Designs should accept this special order to

produce the coolers.

(b)

Discuss additonal factors that Mike and Diane should consider if Current Designs is currently operating at

full capacity.

Situation 2

Current Designs is always working to identify ways to increase efficiency while becoming more environmentally

conscious. During a recent brainstorming session, one employee suggested to Diane Buswell, controller, that the

company should consider replacing the current rotomold oven as a way to realize savings from reduced energy

consumption. The oven operates on natural gas, using 17,000 therms of natural gas for an entire year. A new,

energy-efficient rotomold oven would operate on 15,000 therms of natural gas for an entire year. After seeking out

price quotes from a few suppliers, Diane determined that it would cost approximately $250,000 to purchase a new,

energy-efficient rotomold oven. She determines that the expected useful life of the new oven would be 10 years, and

it would have no salvage value at the end of its useful life. Current Designs would be able to sell the current oven for

$10,000

Instructions

(a)

Prepare an incremental analysis to determine if Current Designs should purchase the new rotomold oven,

assuming that the average price for natural gas over the next 10 years will be $0.65 per therm.

(b)

Diane is concerned that natural gas prices might increase at a faster rate over the next 10 years. If the company

projects that the average natural gas price of the next 10 years could be as high as $0.85 per therm, discuss

how that might change your conclusion in (a).

I need help with the part below!

After you have completed CD7, consider the following additional questions.
1.	Assume in situation 1, the unit selling price changed to $195, fixed overhead changed to $1,800 and
	the cost of modifications changed to $3,000. Show the impact of these changes on decision to accept or
	reject the special order.
2.	Assume in situation 2, the purchase price of the new oven changed to $100,000. Would this change
	the decision to retain or replace the oven?
3.	Assume in situation 3, that the estimated number of seats to be produced changed to 3,500 and the cost to purchase
	one seat from an outside supplier changed to $55. Should Current Designs make or buy the seats?