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Christmas Express makes wreaths in batch sizes of 12. The cutting & assembly process takes 7 minutes per wreath and the decorating process time is 10 minutes per wreath. It takes 12 minutes to move the wreaths from the cutting & assembly process to the decorating process.
(a) Compute the value-added, non-value-added, and the total lead time of the wreath process.
(b) Compute the value-added ratio. Round to the nearest decimal.
Margin of Safety
The difference between actual or expected sales and the break-even sales, measured to assess the risk of incurring losses.
Contribution Margin
The amount by which sales revenue exceeds variable costs, indicating how much contributes to covering fixed costs and generating profit.
Capital Intensive
Describes industries or businesses that require large amounts of investment in heavy machinery, equipment, or other capital assets to produce goods or services.
Margin of Safety
The difference between actual or projected sales and the break-even point, indicating the level of risk in meeting profitability targets.
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