Cycle Time and Velocity Norton Company has the following data for one of its production departments: Theoretical velocity: 650 units per hour Productive minutes available per year: 65,000,000 Annual conversion costs: $390,000,000 Actual velocity: 325 units per hour Required: 1. Calculate the actual conversion cost per unit using actual cycle time and the standard cost per minute. Round your actual cycle time answer to three decimal places and your cost per unit answer to the nearest cent. Actual cycle time fill in the blank 1 minutes per unit Standard cost per minute $fill in the blank 2 per minute Conversion cost per unit $fill in the blank 3 per unit 2. Calculate the ideal conversion cost per unit using theoretical cycle time and the standard cost per minute. If required, round your intermediate calculations and final answers to two decimal places. Theoretical cycle time fill in the blank 4 minutes per unit Conversion cost per unit $fill in the blank 5 per unit 3. What if the actual velocity is 455 units per hour? What is the conversion cost per unit? If required, round your intermediate calculations and final answers to two decimal places. Actual cycle time fill in the blank 7 minutes per unit Conversion cost per unit $fill in the blank 8 per unit
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Cycle Time and Velocity
Norton Company has the following data for one of its production departments:
| Theoretical velocity: 650 units per hour |
| Productive minutes available per year: 65,000,000 |
| Annual conversion costs: $390,000,000 |
| Actual velocity: 325 units per hour |
Required:
1. Calculate the actual conversion cost per unit using actual cycle time and the
| Actual cycle time | fill in the blank 1 | minutes per unit |
| Standard cost per minute | $fill in the blank 2 | per minute |
| Conversion cost per unit | $fill in the blank 3 | per unit |
2. Calculate the ideal conversion cost per unit using theoretical cycle time and the standard cost per minute. If required, round your intermediate calculations and final answers to two decimal places.
| Theoretical cycle time | fill in the blank 4 | minutes per unit |
| Conversion cost per unit | $fill in the blank 5 | per unit |
3. What if the actual velocity is 455 units per hour? What is the conversion cost per unit? If required, round your intermediate calculations and final answers to two decimal places.
| Actual cycle time | fill in the blank 7 | minutes per unit |
| Conversion cost per unit | $fill in the blank 8 | per unit |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
