1. ABC Co. manufactures desks in the finishing and assembly process. Desks are manufactured in 20 unit batches. The finishing time is 12 minutes and the assembly time is 8 minutes per desk. It takes 20 minutes to move a batch of desks from finishing to assembly. (a) Compute the value added, non-value added, and total lead time of this process. (b) Compute the value-added ratio (round to one decimal place if necessary). (c) A study was conducted resulting in the following changes: Desks made in 30 unit batches Finishing time reduced to 8 minutes Move time reduced to 16 minutes Compute the total lead time and value added ratio after the process changes: 2. Johnny Co. operates under the lean philosophy. As a result, it has a production cellfor its power drills. The conversion costs for 4,000 hours of production is budgeted forthe year at $2,400,000. During January, 2,000 units were started and completed. Each drill requires 12 minutes of cell production time. (a) Determine the budgeted cell conversion costs per hour (b) Determine the conversion manufacturing costs per unit

Value added time is the actual time taken for the improvement or progression of the product or it is…

Answered: 1. ABC Co. manufactures desks in the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. ABC Co. manufactures desks in the finishing and assembly process. Desks are
manufactured in 20 unit batches. The finishing time is 12 minutes and the assembly
time is 8 minutes per desk. It takes 20 minutes to move a batch of desks from
finishing to assembly.

(a) Compute the value added, non-value added, and total lead time of this process.


(b) Compute the value-added ratio (round to one decimal place if necessary).


(c) A study was conducted resulting in the following changes:
	Desks made in 30 unit batches
	Finishing time reduced to 8 minutes
	Move time reduced to 16 minutes

	Compute the total lead time and value added ratio after the process changes:


2. Johnny Co. operates under the lean philosophy. As a result, it has a production cell
for its power drills. The conversion costs for 4,000 hours of production is budgeted for
the year at $2,400,000. During January, 2,000 units were started and completed. Each
drill requires 12 minutes of cell production time.

(a) Determine the budgeted cell conversion costs per hour

(b) Determine the conversion manufacturing costs per unit

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