Setup Time for a Product Is 12 Hours

question 19

Multiple Choice

Setup time for a product is 12 hours.A firm that uses JIT and produces the same product has reduced setup time by 1 hour.Setup labor is $20 per hour.If the company wants to reduce non-value-added costs by 40 percent next year, the currently attainable standard for setup time would be

• A) 7.6 hours.
• B) 7.2 hours.
• C) 6.6 hours.
• D) 4.8 hours.

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Definitions:

Operating Segment

An operating segment is a component of a company that engages in business activities from which it can earn revenues and incur expenses, and whose operating results are regularly reviewed by the company's management.

External Customers

Individuals or businesses outside of the company who purchase its products or services, as opposed to internal stakeholders.

Total Income

The aggregate amount of revenue and gains recognized by an entity within a specific period.

Investing Activities

Part of the cash flow statement that shows the cash inflows and outflows related to transactions involving the purchase and sale of long-term assets and investments.