Baker, Inc., supplies wheels for a large bicycle manufacturing company. The bicycle company has recently requested that Baker decrease its delivery time. Baker made a commitment to reduce the lead time for delivery from seven days to one day. To help achieve this goal, engineering and production workers had made the commitment to reduce time for the setup activity (other activities such as moving materials and rework were also being examined simultaneously). Current setup times were 12 hours. Setup cost was $600 per setup hour. For the first quarter, engineering developed a new process design that it believed would reduce the setup time from 12 hours to nine hours. After implementing the design, the actual setup time dropped from 12 hours to seven hours. Engineering believed the actual reduction was sustainable. In the second quarter, production workers suggested a new setup procedure. Engineering gave the suggestion a positive evaluation, and they projected that the new approach would save an additional six hours of setup time. Setup labor was trained to perform the new setup procedures. The actual reduction in setup time based on the suggested changes was four hours.
Required:
- 1. What kaizen setup standard would be used at the beginning of each quarter?
- 2. Describe the kaizen subcycle using the two quarters of data provided by Baker.
- 3. Describe the maintenance subcycle for setups using the two quarters of data provided by Baker.
- 4. How much non-value-added cost was eliminated by the end of two quarters? Discuss the role of kaizen costing in activity-based management.
- 5. Explain why kaizen costing is compatible with activity-based responsibility accounting while
standard costing is compatible with financial-based responsibility accounting.
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- Gordon Company produces custom-made machine parts. A setup activity is required for the batches of parts that it produces. Activity output is measured using setup hours. The value-added standard (SQ) for this activity is zero. On July 1, at the beginning of the fiscal year, 10 setup hours were allowed and used per batch. The standard wage rate for setup labor is $20 per setup hour. During the first quarter of the new fiscal year, the company is planning to implement a new setup method developed by Gordon’s industrial engineers that is expected to reduce setup time by 40 percent. The new procedure was implemented during the first quarter and the improvement expected was realized. Required: 1. What is the setup standard for setup hours and the associated expected cost at the beginning of the first quarter? Setup standard fill in the blank 1 hours per batch Expected cost per batch $fill in the blank 2 The kaizen standard and expected associated cost? Kaizen standard fill in…arrow_forwardSifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates to only one customer's lean cell for the coming year. For the year, projected labor and overhead was $5,154,500 and materials costs were $34 per unit. Planned production included 5,408 hours to produce 16,900 motor drives. Actual production for August was 1,820 units, and motor drives shipped amounted to 1,400 units. Conversion costs are applied based on units of production From the foregoing information, determine the amount of the conversion costs charged to Raw and In Process Inventory during August. Oa. $555,100 Ob. $556,954 Oc. $235,349 Od. $128,100arrow_forwardSifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates to only one customer's lean cell for the coming year. For the year, projected labor and overhead was $4,847,000 and materials costs were $33 per unit. Planned production included 5,920 hours to produce 18,500 motor drives. Actual production for August was 1,850 units, and motor drives shipped amounted to 1,400 units. Conversion costs are applied based on units of production From the foregoing information, determine the cell conversion cost rate. Oa. $818.75 Ob. $262.00 Oc. $2,620.00 Od. $3,462.14arrow_forward
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- Westgate Inc. uses a lean manufacturing strategy to manufacture DVR (digital video recorder) players. The company manufactures DVR players through a single product cell. The budgeted conversion cost for the year is $897,000 for 2,300 production hours. Each unit requires 10 minutes of cell process time. During March, 880 DVR players were manufactured in the cell. The materials cost per unit is $63. The following summary transactions took place during March: 1. Materials were purchased for March production. 2. Conversion costs were applied to production. 3. 880 DVR players were assembled and placed in finished goods. 4. 840 DVR players were sold for $227 per unit. a. Determine the budgeted cell conversion cost per hour. If required, round to the nearest dollar. per hour b. Determine the budgeted cell conversion cost per unit. If required, round to the nearest dollar. $ per unit c. Journalize the summary transactions (1)-(4) for March. If an amount box does not require an entry, leave it…arrow_forwardSifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates to only one customer's lean cell for the coming year. For the year, projected labor and overhead was $3,961,700 and materials costs were $28 per unit. Planned production included 5,536 hours to produce 17,300 motor drives. Actual production for August was 1,920 units, and motor drives shipped amounted to 1,460 units. Conversion costs are applied based on units of production From the foregoing information, determine the production costs transferred to Cost of Goods Sold during August. a.$441,628 b.$493,440 c.$375,220 d.$191,160arrow_forwardMarwick Innovations, Inc. produces exercise and fitness gear. Two of its newer products require a finishing process that can only be completed on machines that were recently purchased for this purpose. The machines have a maximum capacity of 10,500 machine hours, and no other products that the company makes use these machines.Sarah Jacob, the company’s operations manager, is preparing the production schedule for the coming month and can’t seem to find enough machine time to produce enough units to meet the customer demand that the marketing department has included in the sales budget.Michael Stoner, the company’s controller, has gathered the following information about the two products: DumbbellRack WeightBench Selling price per unit $50 $60 Direct materials 20 12 Direct labor 6 12 Variable overhead 3 6 Fixed overhead 5 10 Profit per unit $16 $20 Unit sales demand 5,000…arrow_forward
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning