A Manufacturing Cycle Efficiency (MCE) Ratio of Less Than 1

question 112

True/False

A manufacturing cycle efficiency (MCE) ratio of less than 1.00 is desirable because this is the ratio of non-value-added time to throughput time.

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Definitions:

Customizing Department

A specialized department within an organization that tailors products or services to meet specific customer requirements.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate overhead costs to products based on a certain basis such as labor hours or machine hours.

Job-Order Costing

A costing system used to accumulate costs of manufacturing a job or batch, where each job or batch has its distinct characteristics.

Predetermined Overhead Rate

This rate is calculated before a period begins and is used to apply overhead costs to products based on a selected activity base.