Cycle Time, Velocity, Product Costing Mulhall, Inc., has a JIT system in place. Each manufacturing cell is dedicated to the production of a single product or major subassembly. One cell, dedicated to the production of mopeds, has four operations: machining, finishing, assembly, and qualifying (testing). The machining process is automated, using computers. In this process, the model’s frame and engine are constructed. In finishing, the frame is sandblasted, buffed, and painted. In assembly, the frame and engine are assembled. Finally, each model is tested to ensure operational capability. For the coming year, the moped cell has the following budgeted costs and cell time (both at theoretical capacity): Budgeted conversion costs $5,541,120 Budgeted materials $18,668,000 Cell time 35,520 Theoretical output 17,760 models During the year, the following actual results were obtained: Actual conversion costs $5,541,120 Actual materials $4,009,000 Actual cell time 35,520 hours Actual output 13,320 models Required: 4. Compute the budgeted conversion cost per minute. If required, round your answer to the nearest cent. $fill in the blank per minute Using this rate, compute the conversion cost per model if theoretical output is achieved. $fill in the blank per model Using this measure, compute the conversion cost per model for actual output. $fill in the blank per model Does this product costing approach provide an incentive for the cell manager to reduce cycle time?
Cycle Time, Velocity, Product Costing
Mulhall, Inc., has a JIT system in place. Each manufacturing cell is dedicated to the production of a single product or major subassembly. One cell, dedicated to the production of mopeds, has four operations: machining, finishing, assembly, and qualifying (testing). The machining process is automated, using computers. In this process, the model’s frame and engine are constructed. In finishing, the frame is sandblasted, buffed, and painted. In assembly, the frame and engine are assembled. Finally, each model is tested to ensure operational capability.
For the coming year, the moped cell has the following budgeted costs and cell time (both at theoretical capacity):
| Budgeted conversion costs | $5,541,120 | |
| Budgeted materials | $18,668,000 | |
| Cell time | 35,520 | |
| Theoretical output | 17,760 | models |
During the year, the following actual results were obtained:
| Actual conversion costs | $5,541,120 | |
| Actual materials | $4,009,000 | |
| Actual cell time | 35,520 | hours |
| Actual output | 13,320 | models |
Required:
4. Compute the budgeted conversion cost per minute. If required, round your answer to the nearest cent.
$fill in the blank per minute
Using this rate, compute the conversion cost per model if theoretical output is achieved.
$fill in the blank per model
Using this measure, compute the conversion cost per model for actual output.
$fill in the blank per model
Does this product costing approach provide an incentive for the cell manager to reduce cycle time?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
