WORKING PAPERS F/ FUND ACCOUNTING
WORKING PAPERS F/ FUND ACCOUNTING
22nd Edition
ISBN: 9781308868394
Author: Wild
Publisher: MCG CUSTOM
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Chapter 24, Problem 17E
To determine

Introduction:

Manufacturing Cycle Time (MCT): Manufacturing cycle time refers to the time required in converting raw material into finished goods. It is the sum of Process time, Move time, Inspection time, and Queue time.

• Process time: This is the time required for conversion of raw materials into finished goods.

• Move time: The time during which an order moves from one workstation to the next.

• Inspection time: The time spent in examining a product to confirm quality standards.

• Queue time: The waiting time for a job in front of workstations before being processed.

Manufacturing cycle efficiency (MCE): It is the percentage of the time spent in value added activities during manufacturing process.

To Calculate:

Requirement 1: Manufacturing Cycle Time

Expert Solution
Check Mark

Answer to Problem 17E

Solution:

Manufacturing Cycle Time = 50 hrs

Explanation of Solution

Manufacturing cycle time     = Process time + Move time + Inspection time + Queue time                                                = 16+9+3.5+21.5 = 50 hours

To determine

Requirement 2: Manufacturing Cycle Efficiency (MCE)

Expert Solution
Check Mark

Answer to Problem 17E

Solution:

Manufacturing Cycle Efficiency = 32%

Explanation of Solution

MCE  = Process timeManufacturing cycle time           = 1650 = 0.32 = 32%

Conclusion
The company is spending 32% of its manufacturing cycle time in value added activities and rest 68% in no-value added activities.

To determine

Requirement 3: Increasing Manufacturing Cycle Efficiency (MCE)

Expert Solution
Check Mark

Answer to Problem 17E

Solution:

The Manufacturing Cycle Efficiency can be increased to 0.8 either by increasing the process time in the given manufacturing cycle time or by decreasing the manufacturing cycle time with the given process time. Both of this option will result in decreasing the non-value added activities time.

Explanation of Solution

MCE = Process TimeManufacturing cycle time 

If manufacturing cycle time is same i.e; 50 hours; then the process time should be

Process time  = MCE X Manufacturing Cycle time                       = 0.8 X 50                       = 40 hrs

If process time is same i.e; 16 hours; then the manufacturing cycle time should be

Manufacturing Cycle Time   = Process TimeMCE                                                = 160.8/                                                         = 20 hours

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Sharon Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Carla Vista Company's six divisions. Sharon made the following presentation to Carla Vista's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $25,300." The Other Five Divisions Percy Division Total Sales $1,663,000 $100,900 $1,763,900 Cost of goods sold 978,400 76,500 1,054,900 Gross profit 684,600 24,400 709,000 Operating expenses 528,500 49,700 578,200 Net income $156,100 $(25,300 ) $130,800 In the Percy Division, cost of goods sold is $60,100 variable and $16,400 fixed, and operating expenses are $29,100 variable and $20,600 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Sharon right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding…

Chapter 24 Solutions

WORKING PAPERS F/ FUND ACCOUNTING

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