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Cycle Time and Velocity Bemidii Company has the following data for one of its production departments: Theoretical velocity: 260 units per hour Productive minutes available
Cycle Time and Velocity Bemidii Company has the following data for one of its production departments: Theoretical velocity: 260 units per hour Productive minutes available per year: 12,000,000 Annual conversion costs: $96,000,000 Actual velocity: 104 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 X minutes per unit Standard cost per minute per minute Conversion cost per unit 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 I minutes per unit Conversion cost per unit per unit What incentive exists for managers when cycle time costing is used? To reduce cycle time 3. What if the actual velocity is 182 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 minutes per unit Conversion cost per unit per unit Feedback Check My Work 1. Actual cycle time = Time - Units produced. Standard cost per minute = Cell conversion costs = Minutes available. Conversion Cost per unit = Standard cost per minute x Actual cycle time. 2. Theoretical cycle time = Time - Theoretical velocity. Calculate the ideal conversion cost per unit. See Example 13.1
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