Cycle Time and Velocity Norton Company has the following data for one of its production departments: 

Theoretical velocity: 320 units per hour 

Productive minutes available per year: 63,000,000 

Annual conversion costs: $441,000,000 

Actual velocity: 128 units per hour 

Required: 

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 intermediate calculations and final 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? 

3. What if the actual velocity is 224 units per hour? What is the conversion cost per unit? What effect will this improvement have on delivery performance?

Answer rating: 100% (QA)

1 Actual cycle time 60 minutes128units 469 minutes per ... View the full answer