Abc Costing System
5-47 ABC and TOC Discuss the similarities and differences between activity-based costing and the theory of constraints, as well as situations in which one approach might be preferable to the other.
5-48 Cycle time efficiency and JIT Walker Brothers Company is considering installing a JIT manufacturing system in the hope that it will improve its overall processing cycle efficiency. Data from the traditional system and estimates for the JIT system are presented here for their Nosun Product:
TIME CATEGORY TRADITIONAL SYSTEM JIT SYSTEM
Storage 4 hours 1 hour
Inspection 40 minutes 5 minutes
Moving 80 minutes 20 minutes
Processing 2 hours 75 minutes
a. Calculate processing cycle efficiency (PCE) under the traditional and JIT systems for the Nosun product.
b. Strictly based on your PCE calculations above, should Walker Brothers implement the JIT system? Explain.
5-50 Relevant Costs: dropping a product Merchant Company manufactures and sells three models of electronic printers. Ken Gail, president of the company, is considering dropping model JT484 from its product line because the company has experienced losses for this product over the past three quarters. The following product-level operating data have been compiled for the most recent quarter:
CATEGORY TOTAL JT284 JT384 JT484
Sales $1,000,000 $500,000 $200,000 $300,000
Variable costs ___600,000 __300,000 __100,000 __200,000
Contribution margin $400,000 $200,000 $100,000 $100,000
Fixed costs: Rent $50,000 $25,000 $10,000 $15,000 Depreciation 60,000 30,000 12,000 18,000 Utilities 40,000 20,000 5,000 15,000 Supervisors 50,000 15,000 5,000 30,000 Maintenance 30,000 15,000 6,000 9,000 Administrative __100,000 __30,000 __20,000
5-48 Cycle time efficiency and JIT Walker Brothers Company is considering installing a JIT manufacturing system in the hope that it will improve its overall processing cycle efficiency. Data from the traditional system and estimates for the JIT system are presented here for their Nosun Product:
TIME CATEGORY TRADITIONAL SYSTEM JIT SYSTEM
Storage 4 hours 1 hour
Inspection 40 minutes 5 minutes
Moving 80 minutes 20 minutes
Processing 2 hours 75 minutes
a. Calculate processing cycle efficiency (PCE) under the traditional and JIT systems for the Nosun product.
b. Strictly based on your PCE calculations above, should Walker Brothers implement the JIT system? Explain.
5-50 Relevant Costs: dropping a product Merchant Company manufactures and sells three models of electronic printers. Ken Gail, president of the company, is considering dropping model JT484 from its product line because the company has experienced losses for this product over the past three quarters. The following product-level operating data have been compiled for the most recent quarter:
CATEGORY TOTAL JT284 JT384 JT484
Sales $1,000,000 $500,000 $200,000 $300,000
Variable costs ___600,000 __300,000 __100,000 __200,000
Contribution margin $400,000 $200,000 $100,000 $100,000
Fixed costs: Rent $50,000 $25,000 $10,000 $15,000 Depreciation 60,000 30,000 12,000 18,000 Utilities 40,000 20,000 5,000 15,000 Supervisors 50,000 15,000 5,000 30,000 Maintenance 30,000 15,000 6,000 9,000 Administrative __100,000 __30,000 __20,000