Cycle Time and Velocity

Bemidii Company has the following data for one of its production departments:

Theoretical velocity: 210 units per hour

Productive minutes available per year: 39,000,000

Annual conversion costs: $312,000,000

Actual velocity: 84 units per hour

Required:

1. Calculate the actual conversion cost per unit using actual cycle time and the standard cost per minute. Round your actual cycle time answer to three decimal places and your cost per unit answer to the nearest cent.

Actual cycle time	fill in the blank 1	minutes per unit
Standard cost per minute	$fill in the blank 2	per minute
Conversion cost per unit	$fill in the blank 3	per unit

2. Calculate the ideal conversion cost per unit using theoretical cycle time and the standard cost per minute. If required, round your intermediate calculations and final answers to two decimal places.

Theoretical cycle time	fill in the blank 4	minutes per unit
Conversion cost per unit	$fill in the blank 5	per unit

What incentive exists for managers when cycle time costing is used?

To reduce cycle timeTo increase cycle timeTo keep cycle time constant

3. What if the actual velocity is 147 units per hour? What is the conversion cost per unit? If required, round your intermediate calculations and final answers to two decimal places.

Actual cycle time	fill in the blank 7	minutes per unit
Conversion cost per unit	$fill in the blank 8	per unit