Williams Optical Inc. is considering a new lean product cell. The present manufacturing approachproduces a product in four separate steps. The production batch sizes are 45 units. The processtime for each step is as follows: Process Step 1 5 minutesProcess Step 2 8 minutesProcess Step 3 4 minutesProcess Step 4 3 minutes The time required to move each batch between steps is 5 minutes. In addition, the time tomove raw materials to Process Step 1 is also 5 minutes, and the time to move completed unitsfrom Process Step 4 to finished goods inventory is 5 minutes.The new lean layout will allow the company to reduce the batch sizes from 45 units to 3 units.The time required to move each batch between steps and the inventory locations will be reducedto 2 minutes. The processing time in each step will stay the same.Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the (a) present and (b) proposed production approaches. Round percentages to one dec-imal place.
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.
Williams Optical Inc. is considering a new lean product cell. The present manufacturing approach
produces a product in four separate steps. The production batch sizes are 45 units. The process
time for each step is as follows:
Process Step 1 5 minutes
Process Step 2 8 minutes
Process Step 3 4 minutes
Process Step 4 3 minutes
The time required to move each batch between steps is 5 minutes. In addition, the time to
move raw materials to Process Step 1 is also 5 minutes, and the time to move completed units
from Process Step 4 to finished goods inventory is 5 minutes.
The new lean layout will allow the company to reduce the batch sizes from 45 units to 3 units.
The time required to move each batch between steps and the inventory locations will be reduced
to 2 minutes. The processing time in each step will stay the same.
Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the (a) present and (b) proposed production approaches. Round percentages to one dec-
imal place.
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