Sound Tek Inc. manufactures electronic stereo equipment. The manufacturing process includes printed circuit (PC) board assembly, final assembly, testing, and shipping. In the PC board assembly operation, a number of individuals are responsible for assembling electronic components into printed circuit boards. Each operator is responsible for soldering components according to a given set of instructions. Operators work on batches of 50 printed circuit boards. Each board requires 4 minutes of board assembly time. After each batch is completed, the operator moves the assembled boards to the final assembly area. This move takes 11 minutes to complete.

The final assembly for each stereo unit requires 19 minutes and is also done in batches of 50 units. A batch of 50 stereos is moved into the test building, which is across the street. The move takes 20 minutes. Before conducting the test, the test equipment must be set up for the particular stereo model. The test setup requires 30 minutes. The units wait while the setup is performed. In the final test, the 50-unit batch is tested one at a time. Each test requires 8 minutes. The completed batch, after all testing, is sent to shipping for packaging and final shipment to customers. A complete batch of 50 units is sent from testing to shipping. The Shipping Department is located next to testing. Thus, there is no move time between these two operations. Packaging and labeling requires 11 minutes per unit.

1. Determine the amount of value-added and non-value-added lead time and the value-added ratio in this process for an average stereo unit in a batch of 50 units. Categorize the non-value-added time into wait and move time. Round the percentage to one decimal place.

Strategic Initiatives and CSR Get Hitched Inc. is a production company that is in the process of testing a strategic initiative aimed at increasing gross profit. The company's current sales revenue is $2,400,000. Currently, the company's gross profit 35% of sales, but the company's target gross profit percentage is 40%. The company's current monthly cost of production is $1,560,000. Of this cost, 40% is for labor, 30% is for materials, and 30% is for overhead. The strategic initiative being tested at Get Hitched is a redesign of its production process that splits the process into two sequential procedures. The make up of the costs of production for Procedure 1 is currently 50% direct labor, 45% direct materials, and 5% overhead. The makeup of the costs of production for Procedure 2 is currently 55% direct labor, 25% direct materials, and 20% overhead. Company management estimates that Procedure 1 costs twice as much as Procedure 2. 1. Determine what the cost labor, materials, and overhead for both Procedures 1 and 2 would need to be for the company to meet its target gross profit at the current level of sales. Cost makeup of Procedure 1: Direct Labor 480,000 Direct Materials 432,000 Overhead 48,000 Total $ 960,000 Cost makeup of Procedure 2: Direct Labor $ 264,000 Direct Materials 120,000 Overhead 96,000 Total $ 480,000 2. The company's actual direct materials cost is $446,400 for Procedure 1. Determine the actual cost of direct labor, direct materials, and overhead for each procedure, and the total cost of production for each procedure Cost makeup of Procedure 1: Direct Labor $ 496,000 Direct Materials 446,400 Overhead 49,600 Total $ 992,000 Chapter 28 Homework eBook Show Me How E Print Item Overhead 96,000 Total 480,000 production for 2. The company's actual direct materials cost is 5446,400 for Procedure 1. Determine the actual cost of direct labor, direct materials, and overhead for each procedure, and the total cost each procedure. Cost makeup of Procedure 1: 1 Direct Labor 496,000 Direct Materials 446,400 Overhead 49,600 Total 992,000 Cost makeup of Procedure 2: Direct Labor 272,800 Direct Materials 124,000 Overhead 99,200 Total $ 496,000 3. The company is planning a CSR initiative to reuse some of the indirect materials used in production during Procedure 2. These indirect materials normally make up 70% of the overhead cost for Procedure 2, but the CSR initiative would reduce the usage of indirect materials. Determine what the maximum new cost of these indirect materials could be for Procedure 2 if this CSR initiative is expected to enable the company to meet its target gross profit percentage (holding all other costs constant). Maximum new cost of P2 overhead materials: 2,400,000 X Feedback Check My Work Strategic initiatives are action plans that management implements to achieve the strategic objectives. In other words, strategic objectives are different goals a company wants to achieve, and strategic initiatives are the plans a company makes to achieve those goals. Companies can use the balanced Scorecard to address CSR objectives in a variety of ways. One way is to include CSR objectives and activities in a separate CSR performance perspective