Cycle Time and Conversion Cost per Unit Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 40 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are $624,000 per year. The total labor minutes available are 156,000. During the year, the cell was able to produce 0.3 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. $[ per unit 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product). $[ per unit 3. Briefly explain how Hatch Manufacturing might further benefit from its accountants utilizing prescriptive data analytics (see Exhibit 2.6 for a review of data analytic types). The accountants appear to have utilized ( data analytics to understand the drivers of costs as well as would be reduced from $800 per unit to $600 per unit. A logical next step would be for the accountants to utilize data analytics to identify specific process reengineering actions. analytics to forecast that if current cycle time could be reduced from 200 minutes per unit to 150 minutes per unit, then conversion cost
Cycle Time and Conversion Cost per Unit Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 40 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are $624,000 per year. The total labor minutes available are 156,000. During the year, the cell was able to produce 0.3 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs. Required: 1. Compute the theoretical conversion cost per unit. $[ per unit 2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product). $[ per unit 3. Briefly explain how Hatch Manufacturing might further benefit from its accountants utilizing prescriptive data analytics (see Exhibit 2.6 for a review of data analytic types). The accountants appear to have utilized ( data analytics to understand the drivers of costs as well as would be reduced from $800 per unit to $600 per unit. A logical next step would be for the accountants to utilize data analytics to identify specific process reengineering actions. analytics to forecast that if current cycle time could be reduced from 200 minutes per unit to 150 minutes per unit, then conversion cost
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter13: The Balanced Scorecard: Strategic-based Control
Section: Chapter Questions
Problem 8E: Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its...
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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.
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Transcribed Image Text:Cycle Time and Conversion Cost per Unit
Hatch Manufacturing produces multiple machine parts. The theoretical cycle time for one of its products is 40 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are $624,000 per year. The total labor minutes available are 156,000.
During the year, the cell was able to produce 0.3 units of the product per hour. Suppose also that production incentives exist to minimize unit product costs.
Required:
1. Compute the theoretical conversion cost per unit.
per unit
2. Compute the applied conversion cost per unit (the amount of conversion cost actually assigned to the product).
$
per unit
3. Briefly explain how Hatch Manufacturing might further benefit from its accountants utilizing prescriptive data analytics (see Exhibit 2.6 for a review of data analytic types).
The accountants appear to have utilized
data analytics to understand the drivers of costs as well as
would be reduced from $800 per unit to $600 per unit.
A logical next step would be for the accountants to utilize
data analytics to identify specific process reengineering actions.
analytics to forecast that if current cycle time could be reduced from 200 minutes per unit to 150 minutes per unit, then conversion costs
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