Cycle Time and Velocity

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

Theoretical velocity: 160 units per hourProductive minutes available per year: 18,000,000Annual conversion costs: $144,000,000Actual velocity: 64 units per hourRequired:

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_____ 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 answers to two decimal places.

Theoretical cycle time______minutes per unit

Conversion cost per unit $______ per unit

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

- Select your answer -To reduce cycle time/To increase cycle time/To keep cycle time constant

3.What ifthe actual velocity is 112 units per hour? What is the conversion cost per unit? If required, round your calculations and final answers to two decimal places.

Actual cycle time______ minutes per unit

Conversion cost per unit $____per unit