Reference no: EM13968682
Question # 1
From the table below we can see the rate at which a part is being made by one machine. From this information we can calculate how long it takes to make one part (cycle time). (See worksheet for a more complete table)a. Find the cycle time for a machine at punching, braking, assembly, and finishing for both the old and new lines?
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Process
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Old line
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New Line
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Rate per
machine
(Parts/hr)
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Number of
Machines
per
Station
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Machine
Cycle Time
(minute)
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Rate per
machine
(Parts/hr)
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Number of
Machines
per
Station
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Cycle
Time
(minute)
|
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Punching
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15
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4
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30
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3
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Braking
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12
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4
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40
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4
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Assembly
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20
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2
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25
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7
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Finishing
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50
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1
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45
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8
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b. Find the cycle time for the punching, braking, assembly, and finishing stations for both the old and new lines?
c. What is the throughput rate for the punching, braking and assembly stations for both old and new lines?
d. If the average throughput for the old line is 32 parts per hour and its WIP is 200 what is its average cycle time and is the line performing at its best given the current conditions?
e. If the average throughput for the new line is 87 parts per hour and its WIP is 250 what is its average cycle time and is the line performing at its best given the current conditions?
f. Can any of the lines, make 9032 parts over the course of 100 hrs?
g. How many extra machines would the old and new lines need to make this new takt time and at what stations would these new machines be needed?
Question #2
The Geely car company makes three types of cars small, midsize and SUV. There has been some issue with determining a production schedule that is more in line with customer needs. Management has it that making more SUV's will improve the company's profitability and they are asking you to take a look in to this. A consultant has suggested that it would make more sense for them to use the ABC accounting method to determine their production plan. See the tables below and answer all the questions that follow. Also conclude by suggesting which method would be in their best interests.
Table 1.
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Product
|
Raw
Material
Cost
($/Unit)
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Price
($/Unit)
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Minimum Demand
(Units per Month)
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Maximum Demand
(Units per Month)
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Small Car
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$10,000.00
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$20,000.00
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500
|
900
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Mid Size Car
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$12,000.00
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$35,000.00
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350
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500
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SUV
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$15,000.00
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$45,000.00
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290
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500
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Table 2.
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Product
|
Motor
Assembly
(Minimum
Time Per
Unit in
minutes)
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Final Assembly
(Minimum
Time Per Unit in
minutes)
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Test
(Minimum Time Per Unit
in minutes)
|
Minimum Amount
of time for
assembly (in
minutes)
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Small Car
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3
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2
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1
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3
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Mid Size Car
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4
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3
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4
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5
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SUV
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5
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6
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5
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7
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Table 3.
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Hourly Labor Costs per worker
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$25.00
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Overhead Costs
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$20,000,000.00
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Number of Workers
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250
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1. The new production schedule, due to the recession, calls for 600 small car, 400 mid-size car and 300 SUV's to be made. (See first worksheet in excel to provide all your answers to this question). Using the Traditional method of accounting:
a. How long does it take for each product to be made based on the production plan?
b. Raw Material Cost per product?
c. Labor Costs of Plan per product?
d. Allocated overhead costs per product? (Please use the fractional labor hours here to determine this)e. Profit per product?
f. Unit profit per product?
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Category
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Plant and Equipment
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Management
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Purchasing
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Sales and Shipping
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Total Cost
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$7,000,000.00
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$5,000,000.00
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$4,500,000.00
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$3,500,000.00
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Cost Allocation
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Square feet
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Labor hours
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Purchase orders
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Customer orders
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Total units used
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1200000
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650000
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800
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100
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Small Car
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200000
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50000
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40
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5
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Mid Size Car
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400000
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300000
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240
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30
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SUV
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600000
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300000
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520
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65
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Determine the following based on the original production plan (600 small car, 400 mid-size car and 300 SUV's) using the Activity Based Cost allocation method:
A. Plant and equipment cost per product?
B. Management costs per product?
C. Purchasing Costs?
D. Sales and shipping cost?
E. Total allocated overhead cost?
F. Profit per product?
G. Unit profit per product?
H. Total Profit of production plan?
I. Do you have any suggestions for the Geely Car Company's production plan?
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