Kilmer Company has demand for its only product that exceeds its manufacturing capacity. The company provided the

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Kilmer Company has demand for its only product that exceeds its manufacturing capacity. The company provided the following information for the machine whose limited capacity is prohibiting the company from producing and selling additional units.

Actual run time this week . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          6,600 minutes
Machine time available per week . . . . . . . . . . . . . . . . . . . . . . . . . . . .         11,000 minutes
Actual run rate this week . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 units per minute
Ideal run rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6.0 units per minute
Defect-free output this week . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                23,562 units
Total output this week (including defects) . . . . . . . . . . . . . . . . . . . . .                33,660 units


Required:

1. With respect to the company’s overall equipment effectiveness, calculate the following:

a. The utilization rate.

b. The efficiency rate.

c. The quality rate

d. The overall equipment effectiveness (OEE).

2. With respect to the company’s overall equipment effectiveness, calculate the following:

a. The utilization loss in units during the week.

b. The efficiency loss in units during the week.

c. The quality loss in units during the week.

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Managerial Accounting

ISBN: 9781260247787

17th Edition

Authors: Ray Garrison, Eric Noreen, Peter Brewer

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