Can someone help with MCE? I am not able to determine the calculation for this.
ID: 2035197 • Letter: C
Question
Can someone help with MCE? I am not able to determine the calculation for this.
Exercise 13.9
Cycle Time and Velocity, MCE
Computador has a manufacturing plant in Des Moines that has the theoretical capability to produce 243,000 laptops per quarter but currently produces 91,125 units. The conversion cost per quarter is $7,290,000. There are 60,750 production hours available within the plant per quarter. In addition to the processing minutes per unit used, the production of the laptops uses 10 minutes of move time, 20 minutes of wait time, and 5 minutes of rework time. (All work is done by cell workers.)
Required:
1. Compute the theoretical and actual velocities (per hour) and the theoretical and actual cycle times (minutes per unit produced). If required, round to one decimal place.
2. Compute the ideal and actual amounts of conversion cost assigned per laptop.
3. Calculate MCE. If required, round your answer to two decimal places.
Explanation / Answer
1 (a). Theoretical velocity= Theoretical capability /Production hours available
= 243000 / 60750 = 4 Units per hour
1 (b). Actual velocity =Actual production / Production hours available
= 91125 / 60750 = 1.5 Units per hour
1 (c). Theoretical cycle time = 60 minutes /Theoretical velocity
= 60 / 4 = 15 minutes per unit
1 (d). Actual cycle time = 60 minutes/ Actual velocity
= 60 / 1.5 = 40 minutes per unit
2. Conversion cost rate = Conversion Cost / (Production Minutes available)
= 7290000 / (60750 x 60) = $ 2 per minute
2 (a). Theoretical Assignment Per Unit = Conversion Cost rate x Theoretical Cycle Time
= 2 x 15 = $ 30
2 (b). Actual Assignment Per Unit = Conversion Cost rate x Actual Cycle Time
= 2 x 40 = $ 80
3. MCE = Processing Time / (Processing Time + Move Time +Inspection Time +Waiting Time +Other non-value added time)
= 40 / (40+10+20+5) = 0.53
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