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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 25
CYCLE TIME AND VELOCITY, MCE
A manufacturing plant has the theoretical capability to produce 162,000 laptops per quarter but currently produces 60,750 units. The conversion cost per quarter is $7,290,000. There are 40,500 production hours available within the plant per quarter. In addition to the processing minutes per unit used, the production of the laptops uses 8 minutes of move time, 12 minutes of wait time, and 5 minutes of rework time. (All work is done by cell workers.)
Required:
1. Compute the theoretical and actual velocities (per hour) and the theoretical and actual cycle times (minutes per unit produced).
2. Compute the ideal and actual amounts of conversion cost assigned per laptop.
3. Calculate MCE. How does MCE relate to the conversion cost per laptop?
A manufacturing plant has the theoretical capability to produce 162,000 laptops per quarter but currently produces 60,750 units. The conversion cost per quarter is $7,290,000. There are 40,500 production hours available within the plant per quarter. In addition to the processing minutes per unit used, the production of the laptops uses 8 minutes of move time, 12 minutes of wait time, and 5 minutes of rework time. (All work is done by cell workers.)
Required:
1. Compute the theoretical and actual velocities (per hour) and the theoretical and actual cycle times (minutes per unit produced).
2. Compute the ideal and actual amounts of conversion cost assigned per laptop.
3. Calculate MCE. How does MCE relate to the conversion cost per laptop?
Explanation
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1. Computation of the theoretical and ac...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
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