Question

In: Accounting

Calculate Lead Time Flint Fabricators Inc. machines metal parts for the automotive industry. Under the traditional...

Calculate Lead Time

Flint Fabricators Inc. machines metal parts for the automotive industry. Under the traditional manufacturing approach, the parts are machined through two processes: milling and finishing. Parts are produced in batch sizes of 75 parts. A part requires 2 minutes in milling and 9 minutes in finishing. The move time between the two operations for a complete batch is 10 minutes.

Under the lean philosophy, the part is produced in a cell that includes both the milling and finishing operations. The operating time is unchanged; however, the batch size is reduced to 6 parts and the move time is eliminated.

Determine the value-added, non-value-added, and total lead times, and the value-added ratio under the traditional and lean manufacturing methods. If required, round percentages to one decimal place.

Traditional Philosophy Lean Manufacturing Philosophy
Value-added time min min
Non-value-added time min min
Total lead time min min
Value-added ratio (as a percent) % %

Solutions

Expert Solution

Solution:
Traditional Philosophy Lean Manufacturing Philosophy
Value-added time 11 Min 11 Min
Non-value-added time 824 Min 55 Min
Total lead time 835 Min 66 Min
Value-added ratio (as a percent) 1.3 % 16.7 %
Working Notes:
Traditional Philosophy
Value-added time = 2 min of Milling time + 9 min of finishing time
Value-added time = 11 min
Non-Value Added time = Value Added time X (Batch size - 1) + Move time
Non-Value Added time = 11 min X (75 - 1) + 10 min
Non-Value Added time = 814 min + 10 min
Non-Value Added time = 824 min
Lead time = Value Added time + Non-Value Added time
Lead time = 11 min + 824 min
Lead time = 835 min
Value-Added Ratio = Value Added time / Lead time
Value-Added Ratio = 11 min / 835 min
Value-Added Ratio = 0.0131736
Value-Added Ratio = 1.3 %
Lean Manufacturing Philosophy
Value-added time = 2 min of Milling time + 9 min of finishing time
Value-added time = 11 min
Non-Value Added time = Value Added time X (Batch size - 1) + Move time
Non-Value Added time = 11 min X (6 - 1) + 0 min
Non-Value Added time = 55 min + 0 min
Non-Value Added time = 55 min
Lead time = Value Added time + Non-Value Added time
Lead time = 11 min + 55 min
Lead time = 66 min
Value-Added Ratio = Value Added time / Lead time
Value-Added Ratio = 11 min / 66 min
Value-Added Ratio = 0.1666666
Value-Added Ratio = 16.7 %
Please feel free to ask if anything about above solution in comment section of the question.

Related Solutions

Calculate Lead Time Flint Fabricators Inc. machines metal parts for the automotive industry. Under the traditional...
Calculate Lead Time Flint Fabricators Inc. machines metal parts for the automotive industry. Under the traditional manufacturing approach, the parts are machined through two processes: milling and finishing. Parts are produced in batch sizes of 80 parts. A part requires 4 minutes in milling and 8 minutes in finishing. The move time between the two operations for a complete batch is 9 minutes. Under the lean philosophy, the part is produced in a cell that includes both the milling and...
Gibson Fabricators Corporation Gibson Fabricators Corporation manufactures a variety of parts for the automotive industry. The...
Gibson Fabricators Corporation Gibson Fabricators Corporation manufactures a variety of parts for the automotive industry. The company uses a job-order costing system with a plantwide predetermined overhead rate based on direct labour-hours. On the December 10, 2019, the company’s controller made a preliminary estimate of the predetermined overhead rate for 2020. The new rate was based on the estimated total manufacturing overhead cost of $2,475,000 and the estimated 52,000 total direct labourhours for 2020: Predetermined overhead rate = $2,475,000/ 52,000...
Sharpton Fabricators Corporation manufactures a variety of parts for the automotive industry. The company uses a...
Sharpton Fabricators Corporation manufactures a variety of parts for the automotive industry. The company uses a job-order costing system with a plantwide predetermined overhead rate based on direct labour-hours. On December 10, 2015, the company’s controller made a preliminary estimate of the predetermined overhead rate for 2016. The new rate was based on the estimated total manufacturing overhead cost of $3,402,000 and the estimated 63,000 total direct labour-hours for 2016: Predetermined overhead rate = 3,402,000/63,000 = $54 per direct labour...
Sharpton Fabricators Corporation manufactures a variety of parts for the automotive industry. The company uses a...
Sharpton Fabricators Corporation manufactures a variety of parts for the automotive industry. The company uses a job-order costing system with a plantwide predetermined overhead rate based on direct labor-hours. On December 10, 2015, the company's controller made a preliminary estimate of the predetermined overhead rate for 2016. The new rate was based on the estimated total manufacturing overhead cost of $3,402,000 and the estimated 63,000 total direct labor-hours for 2016:             Predetermined overhead rate = $2,475,000/52,000 hours                                                            =...
Case 4-27. Sharpton Fabricators Corporation manufactures a variety of parts for the automotive industry. th company...
Case 4-27. Sharpton Fabricators Corporation manufactures a variety of parts for the automotive industry. th company uses a job order costing system with a plant wide predetermined overhead rate based on direct hours. On December 10, 2015, the company's controller made preliminary estimates of the predetermined overhead rate for 2016. The new rate was based on the estimated total manufacturing overhead cost of $2,475,000 and the estimated 52,000 total direct labor - hours for 2016. Predetermined overhead rate = $2,475,000/...
Johnson Inc. is a wholesale company selling special parts for the automotive industry. The company uses...
Johnson Inc. is a wholesale company selling special parts for the automotive industry. The company uses weighted-average and a perpetual inventory system. Its inventory records for part SA-123 show the following transactions for the month of May 2020: Date Transaction Units Purchased Unit Cost Units Sold Unit Selling Price May 1 Balance 120 $7.00 May 10 Purchase 500 $7.20 May 15 Sale (100) $12.40 May 21 Sale (150) $12.50 May 23 Purchase 250 $7.30 Required: Assuming Johnson Inc. makes all...
Jillian is the president of a company that makes small parts for the automotive industry. Customers...
Jillian is the president of a company that makes small parts for the automotive industry. Customers are primarily auto manufacturers. Jillian's cousin, Frank, works at the company as a sales representative. A promotion to the sales manager position is open. Frank has applied and so has Lisa, another sales representative. While both Frank and Lisa are good employees, they are skilled in different areas, but Lisa has better evaluations from supervisors. Lisa is great with technology and with placing orders....
Jillian is the president of a company that makes small parts for the automotive industry. Customers...
Jillian is the president of a company that makes small parts for the automotive industry. Customers are primarily auto manufacturers. Jillian's cousin, Frank, works at the company as a sales representative. A promotion to the sales manager position is open. Frank has applied and so has Lisa, another sales representative. While both Frank and Lisa are good employees, they are skilled in different areas, but Lisa has better evaluations from supervisors. Lisa is great with technology and with placing orders....
Case 4-27. Sharpton fabricators corporation manufactures a variety of parts for the automative industry. th company...
Case 4-27. Sharpton fabricators corporation manufactures a variety of parts for the automative industry. th company uses a jo order costing system with a plantwide predetermined overhead rate based on direct hours. On December 10, 2015, the company's controller made a preliminary estimates of the predetermined overhead rate for 2016. The new rate was based on the estimated total manufacturing overhead cost of $2,475,000 and the estimated 52,000 total direct labor - hours for 2016. Pretermined overhead rate = $2,475,000/...
(F. Mayne) Hamilton Metal Fabricators Inc. has a large job, No. 2734, that calls for producing...
(F. Mayne) Hamilton Metal Fabricators Inc. has a large job, No. 2734, that calls for producing various ore bins, chutes, and metal boxes for enlarging a copper concentrator. The following charges were made to the job in November 2015: Direct materials $40,400 Direct manufacturing labour 22,600 Manufacturing overhead 11,300 The contract with the customer called for the total price to be based on a cost-plus approach. The contract defined cost to include direct materials, direct manufacturing labour costs, and manufacturing...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT