Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 13, Problem 26P
1.
To determine
Calculate the velocity and theoretical cycle time that takes to produce one model
1.
Expert Solution
Explanation of Solution
Cycle time: Cycle time and velocity are two operational “measures of responsiveness”. Cycle time is the span of time taken to produce a unit of output from the time the materials are received till the good is supplied to finished goods inventory. Therefore, cycle time is the time taken to produce a product.
Velocity: Velocity is the number of units of output that can be produced within a given period of time.
Calculate the theoretical velocity:
Calculate theoretical cycle time:
2.
To determine
Calculate the actual velocity and the actual cycle time.
2.
Expert Solution
Explanation of Solution
Calculate the actual velocity:
Calculate actual cycle time:
3.
To determine
Calculate the manufacturing efficiency cycle and comment on the efficiency of the operation.
3.
Expert Solution
Explanation of Solution
Manufacturing efficiency ratio: Manufacturing efficiency ratio is a measure of Just-In-Time (JIT) manufacturing system and it expresses the time spent in value-added activities as a percentage of total cycle time.
Calculate Manufacturing cycle efficiency:
Therefore, from the above calculation, it is noted that, the “efficiency of the operation” is very high.
4.
To determine
Compute the budgeted conversion cost per minute, compute the conversion cost per model, compute the conversion cost per model for actual output and explain whether the product costing approach provide an incentive for the cell manager to reduce cycle time.
4.
Expert Solution
Explanation of Solution
Calculate budgeted conversion cost:
Calculate theoretical conversion cost per model:
Calculate actual conversion cost per model:
Yes, the cost per unit can be decreased by decreasing cycle time. The potential reduction is $48 (1) per model.
Working note:
(1)Calculate the potential reduction:
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Chapter 13 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 13 - Describe a strategic-based responsibility...Ch. 13 - What is a Balanced Scorecard?Ch. 13 - What is meant by balanced measures?Ch. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - What are stretch targets? What is their strategic...Ch. 13 - Prob. 7DQCh. 13 - What are the three strategic themes of the...Ch. 13 - Prob. 9DQCh. 13 - Explain what is meant by the long wave and the...
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After the meeting, Karen decided to collect cost data on the two models: the Deluxe model and the Econo model. She decided to track the costs for one week. At the end of the week, she had collected the following data from the pattern department: a. There were a total of 2,500 bows completed: 1,000 Deluxe models and 1,500 Econo models. b. There was no BWIP; however, there were 300 units in EWIP: 200 Deluxe and 100 Econo models. Both models were 80% complete with respect to conversion costs and 100% complete with respect to materials. c. The pattern department experienced the following costs: d. On an experimental basis, the requisition forms for materials were modified to identify the dollar value of the materials used by the Econo and Deluxe models: Required: 1. Compute the unit cost for the handles produced by the pattern department, assuming that process costing is totally appropriate. Round unit cost to two decimal places. 2. 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