University:
Acadia University
Course:
BUSI 2013 | Managerial Accounting
Academic year:

2024
Views:

331

Pages:

5
Author:

Abegail C.

Main Heading: STRATEGIC PROFITABILITY ANALYSIS Subheadings and Content: Throughput: Refers to the number of good units or quantity of services that are produced and sold by an organization within a specified time. Actual velocity can be measured as follows: Manufacturing Cycle Efficiency (MCE) x Process Productivity x Process Quality = Throughput Value-Added Processing Time (VATT): Total Units x Value-Added Processing Time / Total Units = Total Value-Added Time (TVAT) P1: The Cuddly Creations Company: Produces small plastic dolls in its Georgia manufacturing plant. An accountant suggested implementing a new compensation plan based on throughput performance measure to increase productivity. Production Data: Total units attempted: 6,000,000 Good units manufactured: 4,800,000 Processing time (total hours): 800 Value-added processing time: 600 Calculations: How many detective units were produced? Defective Units Produced = 6,000,000 - 4,800,000 = 1,200,000 Compute Process Quality Yield: Process Quality Yield = 4,800,000 / 6,000,000 = 80% Compute MCE: Manufacturing Cycle Time = 600 / 800 = 75% Compute Hourly Throughput: Hourly Throughput = 75% x 10,000 units/hr x 80% = 6,000 units/hr Alternative Solution: 4,800,000 / 800 = 6,000 units/hr Compute Process Productivity: Process Productivity = 4,800,000 / 600 = 10,000 units Ishmal Cannery: Given data: Cans packed & shipped: 30,000 Total cans (some defective): 37,500 Value-added processing time: 18,500 hours Total processing time: 49,000 hours Calculations: MCE: 18,500 / 49,000 = 37.75% Process Productivity: 30,000 / 18,500 = 1.62 cans/hr Process Quality Yield: 30,000 / 37,500 = 80% Throughput using GU & TT: 30,000 / 49,000 = 0.625 cans/hr Verifying Throughput: 37.75% * 1.62 cans/hr * 80% = 0.625 cans/hr Westwood Corporation: Data for 2020 and 2021: Units of KEB produced & sold: 3,320 (2020), 3,021 (2021) Selling Price: $100 (2020), $110 (2021) Direct materials (square feet): 120,000 (2020), 123,000 (2021) Direct materials costs per square foot: $10 (2020), $11 (2021) Manufacturing capacity for KEB: 50,000 units (2020), 52,500 units (2021) Total conversion costs: $1,102,500 (2020) Selling & customer-service capacity: 30 customers (2020), 33 customers (2021) Total selling & customer service costs: $120,000 (2020), $132,000 (2021)