Verified Document

Accounting Costs - Sunair Boat Case The Term Paper

Accounting Costs - SunAir Boat Case The following table shows details of SunAir Boat Builder's molding department's direct cost and overhead variances:

SunAir Boat Builders, Inc.

Detailed Cost Comparison (per boat hull)

Unit Cost per Unit Cost Actual Price Usage Amount Standard Actual Variance Quantity Variance Materials Glass Cloth (sq. ft.) 120 $

Glass Mix (lbs.) 40 $

Unit Cost per Unit Cost Actual Rate Efficiency Amount Standard Actual Variance Quantity Variance Direct Labor Mixing (hrs.) 0.5 $

Molding (hrs.) 1.0 $

Cost (hull) 1 $

The variances observed in the table above can be traced directly to the complexities of the mixing and molding procedure. Production of boat hulls, by its very nature, requires "a great deal of expertise, or 'eyeball'" according to the case study. The following are listed as factors which can affect this process: "too much or too little catalyst...too much or too little heat...failure to allow proper time for curing... [and]...spending too much time on adjustments to mixing or molding equipment." Therefore, care has to be taken to make sure that both materials (glass cloth and mix) and supervision...

Unfortunately, variances did arise between the standard and actual costs.
In the materials category, more glass cloth (126 vs. 120 square feet) and mix (44 vs. 40 pounds) had to be used than expected. Also in the category of materials, although the cost per square foot of the glass cloth went down slightly (to $1.80 per square foot), the cost of the glass mix went up (to $4.09 per pound). In the labor category, although mixing took about as long as expected (.5 hours.), molding took.12 hours more time. In addition, the amount paid to labor for mixing rose to $21.37 from $20.25. And finally, the overhead costs were higher, having increased from $24.30 per boat to $25.91.

Question Two

Considering the business situation of SunAir, the setting of standard costs was the right choice to make. The nature of their product line dictated a seasonal production schedule. And in an effort to enhance "credibility with the bankers," improve general operations and possibly expand operations to include other sizes of boat to the product line, a well founded cost accounting system was vital. The company then decided to institute a standard cost system "to help control costs and to provide…

Cite this Document:
Copy Bibliography Citation

Related Documents

Case Study Yachts Australia
Words: 1163 Length: 4 Document Type: Case Study

Yachts Australia is a small size company owned and operated by a family, and offering charter yacht services in the heart of the Great Barrier Reef; this is an easily navigable area, implying a reduced need for specialized skills. Yachts Australia is currently being run by Alice and Paul, and it has been passed on by Paul's parents, who retired. After taking over the business, the young couple expanded its operations

Activity Based Costing Problem
Words: 570 Length: 2 Document Type: Essay

Cost AccountingA. The allocation system might not be accurate, because it allocates based on the number of units produced. However, it does not take into account the time it takes to produce an individual unit. The overhead costs would be more accurate if they reflected not just the number of units, but the time taken to produce each unit. If the Ogunquit takes up more than 12% of the total

Critical Thinking Case Study Faith Community Hospital
Words: 2168 Length: 7 Document Type: Case Study

Critical Thinking Case Study Faith Community Hospital is a not-for-profit hospital and has a mission statement which is interpreted by everyone the way the want to interpret it. Their mission statement compels them to provide health care services and work towards better health and well-being of the people who belong to the communities that Faith Community Hospital serves. It further includes that they are to provide these services in collaboration with

Project Management: Case Study in Managing a
Words: 14774 Length: 55 Document Type: Term Paper

Project Management: Case Study in Managing a Complex Shipyard Project in Singapore Background of Complex Shipyard Construction Project Company background Project Overview and Objective Work Process of Building Construction Issue Analysis in Shipyard Construction Project Management Literature Review of Project Management Issues in Scope Management Methodology of Scope Management Lessons Learned from Scope Management Issues in Cost Management Methodology of Cost Management Lessons Learned from Cost Management Issues in Human Resources Methodology of HR Management Lessons Learned from Human Resource Management Case Study in Managing a

Rocking the Boat an Agent Is a
Words: 781 Length: 2 Document Type: Essay

Rocking the Boat An agent is a person acting on behalf of the interests of another person or organization. "A person authorized to act for and under the direction of another person when dealing with third parties….An agent can enter into binding agreements on the principal's behalf and may even create liability for the principal if the agent causes harm while carrying out his or her duties" (Agent, 2013, Nolo). In

Hospital Case Study in Any Case Study,
Words: 793 Length: 3 Document Type: Term Paper

Hospital Case Study In any case study, it is important to gather information concerning the topic, or "case," and then ask three questions. The questions are, "What's going on right now?," "What can we do about it?," and "What can we do about it?" In the case of Faith Community Hospital, there are several problems going on that can be divided into three categories: Organizational process issues. Ethics issues. Communication system issues. The first group of

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now