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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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(Appendix 11A) Cycle Time and Velocity

Prakesh Company has the following data for one of its manufacturing cells:

Maximum units produced in a month: 50,000 units

Actual units produced in a month: 40,000 units

Hours of production labor in 1 month: 10,000 hours

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).

(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 10,000 hours for productive hours, 60 minutes for a number of minutes in an hour and 50,000 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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