Management of Mittel Company would like to reduce the amount of time between when a customer places an order and when the order is shipped. For the first quarter of operations during the current year the following data were reported: Inspection time wait time (from order to start of production) Process time Move time Queue tine 0.6 days 15.5 days 3.5 days 1. 3 days 3.6 daye Required: 1. Compute the throughput time. (Round your answer to 1 decimal place.) 2. Compute the manufacturing cycle efficiency (MCE) for the quarter (Round your percentage answer to nearest whole percent.) 3. What percentage of the throughput time was spent in non-value-added activities? (Round your percentage answer to nearest whole percent.) 4. Compute the delivery cycle time. (Round your intermediate calculations and final answer to 1 decimal place.) 5. If by using Lean Production all queue time during production is ollminated what will be the new MCE? (Do not round intermediate calculations. Round your percentage answer to 1 decimal place.) 1. Throughput time 2 Manufacturing cycle efficiency 3. Non-value-added throughput time 4. Delivery cycle time 5. New manufacturing cycle efficiency days % % days % "I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division "But I want to see the numbers before I make any move. Our division's return on investment (ROI) has led the company for three years, and I don't want any letdown. Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest Rois. Operating results for the company's Office Products Division for this year are given below: Sales Variable expenses Contribution margin Pixed expenses Net operating income Divisional average operating assets $ 21,750,000 13.731,600 8,018, 400 6,025,000 $11.993,400 $ 4,338,800 The company had an overall return on investment (ROI) of 18.00% this year (considdring all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2.126,350. The cost and revenue characteristics of the new product line per year would be: Sales Variable expenses Fixed expenses $9,350,000 658 of sales $2,560,500 (Do not round intermediate calculations. Round your answers to 2 decimal places.) 1. % 2. ROI for this year ROI for the new product line by itself ROI for next year % 3. % 6. Suppose that the company's minimum required rate of return on operating assets is 14% and that perfor evaluated using residual income, a. Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself. C. Compute the Office Products Division's residual income for next year assuming that it performs the same adds the new product line. 1. 2 2. Residual income for this year Residual income for the new product line by itself Residual income for next year 3
