USING THE DECISION TOOLS | Current Designs Current Designs faces many situations where it needs to apply the decision tools in this chapter, such as analyzing the balance sheet for optimal inventory levels. For example, assume that the market has responded enthusiastically to a new Current Designs' model, the Otter. As a result, the company has established a separate manufacturing facility to produce these kayaks. Now assume that the company produces 1,000 of these kayaks per month. Current Designs' monthly manufacturing costs and other data for the Otter are as follows. 1. Rent on manufacturing equipment (lease cost) $2,000/month 2. Insurance on manufacturing building $750/month 3. Raw materials (plastic, fiberglass, etc.) $180/kayak 4. Utility costs for manufacturing facility $1,000/month 5. Supplies for administrative office $800/month 6. Wages for assembly line workers in manufacturing facility $130/kayak 7. Depreciation on administrative office equipment $650/month 8. Miscellaneous manufacturing materials (lubricants, solders, etc.) $12/kayak 9. Property taxes on manufacturing building $24,000/year 10. Manufacturing supervisor's salary $5,000/month 11. Advertising for the Otter $30,000/year 12. Sales commissions $30/kayak 13. Depreciation on manufacturing building $4,000/month Instructions a. Prepare an answer sheet with the following column headings. Product Costs Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs Enter each cost item on your answer sheet, placing an "X" mark under the appropriate headings. b. Compute total manufacturing costs for the month.Cost Item Product Costs 1. Rent on manufacturing equipment ($2,000 /month) 2. Insurance on manufacturing building ($75o/month) 3. Raw materials ($180 / kayak) 4. Manufacturing utilities ($1,000 / month) 5. Ofce supplies ($800 / month) 6. Wages for assembly workers ($130 / kayak) 7. Depreciation on administrative ofce equipment ($650/ month) 8. Miscellaneous manufacturing materials ($ 12 / kayak) 9. Property taxes on manufacturing building ($24,000/year) 10. Manufacturing supervisor's salary ($5,000/ month) 11. Advertising cost ($30,000/year) 12. Sales commissions ($3o/kayak) 13. Depreciation on manufacturing building ($4,000/month) Direct Materials Direct Labor Manufacturing Overhead X X Period Costs M Cost Item Manufacturing Cost Rent on manufacturing equipment $ 2,000 Insurance on manufacturing building 750 Raw materials ($180 x 1,000) 180,000 Manufacturing utilities 1,000 Labor ($130 x 1,000) 130,000 Miscellaneous materials ($12 x 1,000) 12,000 Property taxes on manufacturing building ($24,000 + 12) 2,000 Manufacturing supervisor's salary 5,000 Depreciation on manufacturing building 4,000 Total manufacturing costs $336,750 Current Designs' monthly manufacturing cost to produce 1,000 Otters is $336,750