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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

11-24 (Appendix 11A) Calculating Manufacturing Cycle Efficiency

Refer to the information for Theta Company on the previous page. The actual cycle time for Theta Company is 3.2 minutes, and the theoretical cycle time is 3 minutes.

Required:

  1. 1. Calculate the amount of processing time and the amount of nonprocessing time.
  2. 2. Calculate the MCE. (Round to two decimal places.)

1.

To determine

Calculate the amount of processing time per unit and non-processing time per unit.

Explanation

Manufacturing Cycle Efficiency:

MCE can be defined as the operational measure which can be determined by dividing the value-added time by the total time. Both nonvalue-added time and value-added time are included in the manufacturing cycle efficiency.

The processing time will be equivalent to the theoretical cycle time that is 3 minutes per unit.

Use the following formula to calculate the non-processing time:

Non-processing time=Actual cycle timeTheoretical cycle time

Substitute 3

2.

To determine

Calculate MCE.

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