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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Use the following information for Brief Exercises 11-23 and 11-24:

Theta Company has the following data for one of its manufacturing plants:

Maximum units produced in a quarter (3-month period): 400,000 units Actual units produced in a quarter (3-month period): 375,000 units Productive hours in one quarter: 20,000 hours

11-23 (Appendix 11A) Calculating Cycle Time and Velocity

Refer to the information for Theta Company above.

Required:

Compute the (1) theoretical cycle time (in minutes), (2) actual cycle time (in minutes), (3) theoretical velocity in units per hour, and (4) actual velocity in units per hour. (Round units to the nearest whole unit.)

(1)

To determine

Calculate theoretical cycle time (in minutes).

Explanation

Cycle Time:

Cycle time is the activity performance measure that calculates the duration of time which is required to manufacture one unit of product.

Use the following formula to calculate the theoretical cycle time:

Theoretical cycle time=(Productive hours×Number of minutes in an hour)Maximum units produced

Substitute 20,000 hours for productive hours, 60 minutes for a number of minutes in an hour and 400,000 units for maximum units produced in the above formula

(2)

To determine

Calculate the actual cycle time (in minutes).

(3)

To determine

Calculate theoretical velocity (in units per hour).

(4)

To determine

Calculate actual velocity (in units per hour).

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