Wiltshire Limited produces woollen blankets and clothing.During Year 1,Wiltshire produced 10,000 items of blankets and clothing using 4,250 bundles of wool at a price of $10 per bundle.
The difference between the actual quantity of materials and the standard quantity of materials is due to waste.At the end of Year 1,Wiltshire developed a new process that would cut down on the waste by 60%.By the end of Year 2,the company had actually cut down its waste by 50%.
A. Identify the kaizen and materials standards in place at the beginning of Year 2. Express
the standards in both physical and financial terms.
B. Calculate the expected cost reduction.
C. Calculate the actual cost reduction.

Question

Wiltshire Limited produces woollen blankets and clothing.During Year 1,Wiltshire produced 10,000 items of blankets and clothing using 4,250 bundles of wool at a price of $10 per bundle.
The difference between the actual quantity of materials and the standard quantity of materials is due to waste.At the end of Year 1,Wiltshire developed a new process that would cut down on the waste by 60%.By the end of Year 2,the company had actually cut down its waste by 50%.
  A. Identify the kaizen and materials standards in place at the beginning of Year 2. Express
the standards in both physical and financial terms.
B. Calculate the expected cost reduction.
C. Calculate the actual cost reduction.

Quizplus · Accepted Answer

The Answer of Wiltshire Limited produces woollen blankets and clothing.During Year 1,Wiltshire produced 10,000 items of blankets and clothing using 4,250 bundles of wool at a price of $10 per bundle.
The difference between the actual quantity of materials and the standard quantity of materials is due to waste.At the end of Year 1,Wiltshire developed a new process that would cut down on the waste by 60%.By the end of Year 2,the company had actually cut down its waste by 50%.
  A. Identify the kaizen and materials standards in place at the beginning of Year 2. Express
the standards in both physical and financial terms.
B. Calculate the expected cost reduction.
C. Calculate the actual cost reduction.

Wiltshire Limited Produces Woollen Blankets and Clothing