1. Can management of a company such as Research in Motion (RIM) use cycle time a
ID: 340587 • Letter: 1
Question
1. Can management of a company such as Research in Motion (RIM) use cycle time and cycle efficiency as useful measures of performance? What would be another useful measure?
2. (BTN 2-4) Assume you are preparing for a second interview with a manufacturing company. The company manufactures customer-order holiday decorations and display items. During your first interview, you learned that the managers are not currently pleased with the timeliness of information and inventory measurements.
Discuss both A) what type of cost accounting system this company should use, and B) the documents that you would recommend as part of the cost accounting system.
Explanation / Answer
1.
Cycle Time: It is the term, used to measure the total time consumed in the production cycle of a company’s products. It is used as an evaluation tool for the performance of production cycle.
Cycle Efficiency: Another tool to measure the performance of production cycle is cycle efficiency. It reports the value added time in a production cycle with respect to the total time consumed in that cycle.
Yes, the company like Research in Motion can use the cycle time and cycle efficiency to measure its production performance.
2.A)
Job order costing: The costing system that provides separate manufacturing cost for different set of products or batches of productions. It is highly recommended for the company that has products different from each other based on the customer demands and other factors.
So, the given company should use the job order costing system as it provides customer-order holiday decorations and display items. The products of this company are different for each order received because each customer might have different requirement. So the resources and costs will be different for each order.
Thus, job order costing is the best suited costing system for given company.
B). Documents required for job order costing system:
Job cost sheet: Used to record and track the detailed information about job and customer.
Materials requisition form: Used to proper allocation and utilization of raw materials consumed.
Time ticket: Used to record and track the labor costs required and assigned to each job order.
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