Cycle Time, Conversion Cost per Unit, MCE 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). Theoretical velocity Theoretical cycle time 2. Compute the ideal amount of conversion cost that will be assigned per subassembly. $___________ per unit 3 (a). 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.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Cycle Time, Conversion Cost per Unit, MCE
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).
| Theoretical velocity | ||
| Theoretical cycle time |
2. Compute the ideal amount of conversion cost that will be assigned per subassembly.
$___________ per unit
3 (a). 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.
$________ per unit
3 (b). What happens to product cost if the time to produce a unit is decreased to 25 minutes?
$__________ per unit
4. Assuming the actual time to produce one fuel pump is 40 minutes, calculate MCE. If required, round your answer to two decimal places.
f____________
How much non-value-added time is being used?
______________ minutes
How much is it costing per unit?
$______________________ per unit
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