24· The combined inspection and move time for this operation would be: A. 4 hour

Question

24· The combined inspection and move time for this operation would be: A. 4 hours B. 1 hour C. 2 hours D. cannot be determined from information provided 25-26 A corporation's management keeps track of the time it takes to process orders. During the most recent month, the following average times were recorded per order: Days 15.6 0.8 Wait time Inspection time Process time. Move time Queue time 0.7 3. 9 25. Compute the manufacturing cycle efficiency (MCE). 26. What percentage of the production time is spent in non-value-added activities? 27-28 Last year a division of a major corporation had total sales of $26,110,000, net operating income of $1,801,590, and average operating assets of $7,000,000. The company's minimum required rate of return is 18%. An investment in new equipment of $1,000,000 will result in a 15% increase in NOI. 27. What is the division's residual income before the new investment? 28. If the division manager is evaluated based on residual income, would he make the investment in new equipment? Why or why not?

Explanation / Answer

24) Data for this question is missing.

25). Manufacturing cycle efficiency:

Throughput time = process time + Inspection time +Move time +Queue time

= 1.6+0.8+0.7+3.9 = 7 days

Manufacturing cycle efficiency = process time / Throughput time

= 1.6 / 7 = 0.2285 roughly 0.23 = 23%

26)

Percentage of production time spend on non-value added activities

= 100% - MCE in percentage = 100 -23 = 77%

27) Residual income before new investment

= net operating income - [average opeating assets * minimum required rate of return]

= 1,801,590 - [7,000,000 * 0.18]

= 5,41,590

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.