Norton Company has the following data for one of its production departments: Theoretical velocity: 300 units per hour Productive minutes available per year: 10,000,000 Annual conversion costs: $60,000,000 Actual velocity: 160 units per hour Based on the above information, the cycle time will be: Select one: a. .475 minutes per unit b. .275 minutes per unit C. .175 minutes per unit d. .375 minutes per unit

Norton Company has the following data for one of its production departments: Theoretical velocity: 300 units per hour Productive minutes available per year: 10,000,000 Annual conversion costs: $60,000,000 Actual velocity: 160 units per hour Based on the above information, the cycle time will be: Select one: a. .475 minutes per unit b. .275 minutes per unit C. .175 minutes per unit d. .375 minutes per unit

Name: Norton Company has the following data for one ofits production depart
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Description: Norton Company has the following data for one ofits production departments:Theoretical velocity: 300 units per hourProductive minutes available per year: 10,000,000Annual conversion costs: $60,000,000Actual velocity: 160 units per hourBased on the a

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 28E: Assume that the inspection activity has an expected cost of 120,000. Expected direct labor hours are...

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Lander Parts, Inc., produces various automobile parts. In one plant, Lander has a manufacturing cell with the theoretical capability to produce 450,000 fuel pumps per quarter. The conversion cost per quarter is 9,000,000. There are 150,000 production hours available within the cell per quarter. Required: 1. Compute the theoretical velocity (per hour) and the theoretical cycle time (minutes per unit produced). 2. Compute the ideal amount of conversion cost that will be assigned per subassembly. 3. Suppose the actual time required to produce a fuel pump is 40 minutes. Compute the amount of conversion cost actually assigned to each unit produced. What happens to product cost if the time to produce a unit is decreased to 25 minutes? How can a firm encourage managers to reduce cycle time? Finally, discuss how this approach to assigning conversion cost can improve delivery time. 4. Assuming the actual time to produce one fuel pump is 40 minutes, calculate MCE. How much non-value-added time is being used? How much is it costing per unit? 5. Cycle time, velocity, MCE, conversion cost per unit (theoretical conversion rate actual conversion time), and non-value-added costs are all measures of performance for the cell process. Discuss the incentives provided by these measures.
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Assume that the inspection activity has an expected cost of 120,000. Expected direct labor hours are 3,000, and expected number of inspections is 600. The best activity rate for inspection is as follows: a. 40 per inspection b. 40 per hour c. 200 per inspection d. 200 per hour
Norton Company has the following data for one of its production departments: Theoretical velocity: 300 units per hour Productive minutes available per year: 10,000,000 Annual conversion costs: $60,000,000 Actual velocity: 160 units per hour Based on the above information, the theoretical cycle time will be Select one: a. 4 minutes per unit b. .2 minutes per unit c. Right answer is not listed d. .3 minutes per unit
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