At the beginning of the current year,Smith Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products. $\begin{array}{lr}
\text { Theoretical annual capacity } & 4,000 \
\text { Actual production } & 3,600 \
\text { Production hours available } & 2,000 \
\text { Actual cost per unit } & \$ 28
\end{array}$

-What is the theoretical velocity per hour?
A)0.5 units
B)0.55 units
C)1.8 units
D)2.0 units

Question

At the beginning of the current year,Smith Company installed a JIT purchasing and manufacturing system.The following information has been gathered about one of the company's products. $\begin{array}{lr}
\text { Theoretical annual capacity } & 4,000 \
\text { Actual production } & 3,600 \
\text { Production hours available } & 2,000 \
\text { Actual cost per unit } & \$ 28
\end{array}$
 
-What is the theoretical velocity per hour?
A)0.5 units
B)0.55 units
C)1.8 units
D)2.0 units

Quizplus · Accepted Answer

The theoretical velocity per hour is calculated by dividing the theoretical annual capacity by the production hours available. Thus, $ \frac{4,000 \text{ units}}{2,000 \text{ hours}} = 2.0 \text{ units per hour}$.

At the Beginning of the Current Year,Smith Company Installed a JIT