# Question: Lander Parts Inc produces various automobile parts In one plant

Lander Parts, Inc., produces various automobile parts. In one plant, Lander has a manufacturing cell with the theoretical capability to produce 450,000 fuel pumps per quarter. The conversion cost per quarter is $9,000,000. There are 150,000 production hours available within the cell per quarter.

Required:

1. Compute the theoretical velocity (per hour) and the theoretical cycle time (minutes per unit produced).

2. Compute the ideal amount of conversion cost that will be assigned per subassembly.

3. Suppose the actual time required to produce a fuel pump is 40 minutes. Compute the amount of conversion cost actually assigned to each unit produced. What happens to product cost if the time to produce a unit is decreased to 25 minutes? How can a ﬁrm encourage managers to reduce cycle time? Finally, discuss how this approach to assigning conversion cost can improve delivery time.

4. Assuming the actual time to produce one fuel pump is 40 minutes, calculate MCE. How much non-value-added time is being used? How much is it costing per unit?

5. Cycle time, velocity, MCE, conversion cost per unit (theoretical conversion rate × actual conversion time), and non-value-added costs are all measures of performance for the cell process. Discuss the incentives provided by these measures.

Required:

1. Compute the theoretical velocity (per hour) and the theoretical cycle time (minutes per unit produced).

2. Compute the ideal amount of conversion cost that will be assigned per subassembly.

3. Suppose the actual time required to produce a fuel pump is 40 minutes. Compute the amount of conversion cost actually assigned to each unit produced. What happens to product cost if the time to produce a unit is decreased to 25 minutes? How can a ﬁrm encourage managers to reduce cycle time? Finally, discuss how this approach to assigning conversion cost can improve delivery time.

4. Assuming the actual time to produce one fuel pump is 40 minutes, calculate MCE. How much non-value-added time is being used? How much is it costing per unit?

5. Cycle time, velocity, MCE, conversion cost per unit (theoretical conversion rate × actual conversion time), and non-value-added costs are all measures of performance for the cell process. Discuss the incentives provided by these measures.

**View Solution:**## Answer to relevant Questions

Auﬂegger, Inc., manufactures a product that experiences the following activities (and times): Required: 1. Compute the MCE for this product. 2. A study lists the following root causes of the inefﬁciencies: poor ...“A Balanced Scorecard expresses the complete story of a company’s strategy through an integrated set of ﬁnancial and nonﬁnancial measures that are both predictive and historical and that may be measured subjectively ...What is the difference between the zero-defects philosophy and the robust quality philosophy? Javier Company has sales of $8 million and quality costs of $1,600,000. The company is embarking on a major quality improvement program. During the next three years, Javier intends to attack failure costs by increasing its ...Which of the following quality costs is an internal failure cost? a. Inspection of reworked units b. Lost sales because of products failing to meet specifications c. Replacing a defective product d. Training production line ...Post your question