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Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787 Exercise 21
CYCLE TIME AND VELOCITY
Blackburn Manufacturing has the following data for one of its production departments:
Theoretical velocity: 75 units per hour
Productive minutes available per year: 2,500,000
Annual conversion costs: $15,000,000
Actual velocity: 40 units per hour
Required:
1. Calculate the actual conversion cost per unit using actual cycle time and the standard cost per minute.
2. Calculate the ideal conversion cost per unit using theoretical cycle time and the standard cost per minute. What incentive exists for managers when cycle time costing is used?
3. What if the actual velocity is 55 units per hour? What is the conversion cost per unit? What effect will this improvement have on delivery performance?
Blackburn Manufacturing has the following data for one of its production departments:
Theoretical velocity: 75 units per hour
Productive minutes available per year: 2,500,000
Annual conversion costs: $15,000,000
Actual velocity: 40 units per hour
Required:
1. Calculate the actual conversion cost per unit using actual cycle time and the standard cost per minute.
2. Calculate the ideal conversion cost per unit using theoretical cycle time and the standard cost per minute. What incentive exists for managers when cycle time costing is used?
3. What if the actual velocity is 55 units per hour? What is the conversion cost per unit? What effect will this improvement have on delivery performance?
Explanation
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Verified
1.
Calculation of the actual conversion...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
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