Continuous Flow vs. Departmental Manufacturing During the week of August 21, Parley Manufacturing produced and shipped 4,000 units of its machine tools: 1,500 units of Tool SK1 and 2,500 units of Tool SK3. The cycle time for SK1 is 0.73 hour, and the cycle time for SK3 is 0.56 hour. The following costs were incurred: Parley Manufacturing Value-Stream Costs and Production Hours This Week, August 21 Net Hours Materials Salaries Machining Other Total Cost / Wages 400 $4,500 Order processing Production planning 9,000 Purchasing 200 Casting $9,000 $4,500 10,500 3,000 6,750 116,625 49,000 31,250 Grinding $4,500 9,000 6,750 36,375 10,500 12,500 2,625 2,250 3,000 $87,500 Drilling 500 $66,750 600 25,000 125 18,750 150 150 325 2,500 $110,500 Inspection 2,625 Packaging and shipping Invoicing Totals 2,250 3,000 $225,000 $19,500 $7,500 1. Assume that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost. Round your answers to two decimal places. $ 56.25 per unit Complete the statement below on the accuracy of the value computed. The cost is very accurate as the value stream costs all belong to that product V . 2. Assume that Tool SKi is responsible for 60% of the materials cost. Calculate the unit cost for Tool Ski and Tool SK3. Explain the rationale for using units shipped instead of units produced in the calculation. Round your answers to two decimal places. Tool SK1 9 0 X Tool SK3 $ 36 x Complete the statement below on the accuracy of the Model A and Model B values computed. Complete the statement below that explains the rationale for using units shipped instead of units produced in the calculation. Using units shipped for the unit calculation motivates managers to increase X inventories. 3. Calculate the unit cost for the two models, using DBC. Round your answers to two decimal places. SK1 $ SK3 $ 205.48 x 160.71 x Explain when and why this cost is more accurate than the unit cost calculated in Requirement 2. approach is DBC approximates ABC cost assignments, better reflecting the consumption of resources by the two products. In this case, the reasonably close to the DBC assignments. Continuous Flow vs. Departmental Manufacturing During the week of August 21, Parley Manufacturing produced and shipped 4,000 units of its machine tools: 1,500 units of Tool SK1 and 2,500 units of Tool SK3. The cycle time for SK1 is 0.73 hour, and the cycle time for SK3 is 0.56 hour. The following costs were incurred: Parley Manufacturing Value-Stream Costs and Production Hours This Week, August 21 Net Hours Materials Salaries Machining Other Total Cost / Wages 400 $4,500 Order processing Production planning 9,000 Purchasing 200 Casting $9,000 $4,500 10,500 3,000 6,750 116,625 49,000 31,250 Grinding $4,500 9,000 6,750 36,375 10,500 12,500 2,625 2,250 3,000 $87,500 Drilling 500 $66,750 600 25,000 125 18,750 150 150 325 2,500 $110,500 Inspection 2,625 Packaging and shipping Invoicing Totals 2,250 3,000 $225,000 $19,500 $7,500 1. Assume that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost. Round your answers to two decimal places. $ 56.25 per unit Complete the statement below on the accuracy of the value computed. The cost is very accurate as the value stream costs all belong to that product V . 2. Assume that Tool SKi is responsible for 60% of the materials cost. Calculate the unit cost for Tool Ski and Tool SK3. Explain the rationale for using units shipped instead of units produced in the calculation. Round your answers to two decimal places. Tool SK1 9 0 X Tool SK3 $ 36 x Complete the statement below on the accuracy of the Model A and Model B values computed. Complete the statement below that explains the rationale for using units shipped instead of units produced in the calculation. Using units shipped for the unit calculation motivates managers to increase X inventories. 3. Calculate the unit cost for the two models, using DBC. Round your answers to two decimal places. SK1 $ SK3 $ 205.48 x 160.71 x Explain when and why this cost is more accurate than the unit cost calculated in Requirement 2. approach is DBC approximates ABC cost assignments, better reflecting the consumption of resources by the two products. In this case, the reasonably close to the DBC assignments
