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Kaizen Costing Gordon Company produces custom-made machine parts. A setup activity is required for the batches...

Kaizen Costing Gordon Company produces custom-made machine parts. A setup activity is required for the batches of parts that it produces. Activity output is measured using setup hours. The value-added standard (SQ) for this activity is zero. On July 1, at the beginning of the fiscal year, 18 setup hours were allowed and used per batch. The standard wage rate for setup labor is $17 per setup hour. During the first quarter of the new fiscal year, the company is planning to implement a new setup method developed by Gordon’s industrial engineers that is expected to reduce setup time by 20 percent. The new procedure was implemented during the first quarter and the improvement expected was realized. If required, round hours to two decimal places and costs to the nearest cent. Required: 1. What is the setup standard for setup hours and the associated expected cost at the beginning of the first quarter? (set up standard hours per batch, and expected cost per batchs. 2.the kaizen standard and expected associated cost? 3.what is the setup standard for setup hours and the associated cost at the end of the first quarter? (setup standard, expected cost) 4. What if the new procedure implemented in the first quarter only produced a 10 percent reduction in setup time instead of the expected 20 percent reduction? what would the new maintance and standard cost be? (maintance standard per batch cost and standard batch cost)

Solutions

Expert Solution

Qs 1:  

Setup Standard = 18 hours per batch

Associated expected cost:?

Standard wage rate given = $17 per setup hour

Therefore, Expected cost per batch = 18 hours * $17 = $306

____________________________________________________________________________________________

Qs 2:

Kaizen Standard:

Setup Standard = 18 hours per batch?

Expected reduction in setup hours in the first quarter = 20%

Therefore, Kaizen Standard = 18 - (18 hours*0.20) = 14.40 hours per batch

Standard wage rate given = $17 per setup hour

Expected Cost per batch = 14.40 hours * $17 = $244.80

____________________________________________________________________________________________

Qs 3:

Setup Standard = 18 hours per batch?

Expected reduction in setup hours in the first quarter = 20%

Therefore, Setup standard at the end of the quarter = 18 - (18 hours*0.20) = 14.40 hours per batch

Standard wage rate given = $17 per setup hour

Expected Cost per batch at the end of the quarter = 14.40 hours * $17 = $244.80

____________________________________________________________________________________________

Qs 4:

Setup Standard = 18 hours per batch?

Expected reduction in setup hours in the first quarter = 10%

Therefore, Maintenance Standard = 18 - (18 hours*0.10) = 16.20 hours

Standard wage rate given = $17 per setup hour

Standard batch cost = 16.20 hours * $17 = $275.40

ekkarill92 answered 1 year ago
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