Master Chef Appliance Company manufactures home kitchen appliances. The manufacturing process includes stamping,final assembly, testing, and shipping. In the stamping operation, a number of individuals are responsible for stampingthe steel outer surface of the appliance. The stamping operation is set up prior to each run. A run of 40 stampings iscompleted after each setup. A setup requires 60 minutes. The parts wait for the setup to be completed before stampingbegins. Each stamping requires 5 minutes of operating time. After each batch is completed, the operator moves thestamped covers to the final assembly area. This move takes 10 minutes to complete.The final assembly for each appliance unit requires 22 minutes and is also done in batches of 40 appliance units. Thebatch of 40 appliance units is moved into the test building, which is across the street. The move takes 25 minutes. In thefinal test, the 40-unit batch is tested one at a time. Each test requires 8 minutes. The completed units are sent toshipping for packaging and final shipment to customers. A complete batch of 40 units is sent from testing to shipping.The Shipping Department is located next to testing. Thus, there is no move time between these two operations.Packaging and shipment labeling requires 15 minutes per unit.Required:1. Determine the amount of value-added and non-value-added lead time and the value-added ratio in this process foran average kitchen appliance in a batch of 40 units. Round percentages to one decimal place. Categorize the non-valueadded time into wait and move time.Value-added lead time min.Non-value-added lead time:Wait time lead time min.Move time lead time min.Total non-value-added lead time min.Total lead time min.Value-added ratio (as a percent) %2. The company could improve the process by changing the layout from:
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.
Master Chef Appliance Company manufactures home kitchen appliances. The manufacturing process includes stamping,
final assembly, testing, and shipping. In the stamping operation, a number of individuals are responsible for stamping
the steel outer surface of the appliance. The stamping operation is set up prior to each run. A run of 40 stampings is
completed after each setup. A setup requires 60 minutes. The parts wait for the setup to be completed before stamping
begins. Each stamping requires 5 minutes of operating time. After each batch is completed, the operator moves the
stamped covers to the final assembly area. This move takes 10 minutes to complete.
The final assembly for each appliance unit requires 22 minutes and is also done in batches of 40 appliance units. The
batch of 40 appliance units is moved into the test building, which is across the street. The move takes 25 minutes. In the
final test, the 40-unit batch is tested one at a time. Each test requires 8 minutes. The completed units are sent to
shipping for packaging and final shipment to customers. A complete batch of 40 units is sent from testing to shipping.
The Shipping Department is located next to testing. Thus, there is no move time between these two operations.
Packaging and shipment labeling requires 15 minutes per unit.
Required:
1. Determine the amount of value-added and non-value-added lead time and the value-added ratio in this process for
an average kitchen appliance in a batch of 40 units. Round percentages to one decimal place. Categorize the non-valueadded time into wait and move time.
Value-added lead time min.
Non-value-added lead time:
Wait time lead time min.
Move time lead time min.
Total non-value-added lead time min.
Total lead time min.
Value-added ratio (as a percent) %
2. The company could improve the process by changing the layout from:
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