Lionheart Manufacturing Has a Theoretical Capability to Produce 20,250 Printers

question 65

Essay

Lionheart Manufacturing has a theoretical capability to produce 20,250 printers per quarter but currently produces 10,125 printers. The conversion cost per quarter is $4,860,000. There are 6,750 production hours available within the plant per quarter. In addition to the processing minutes per unit used, the production of printers uses 12 minutes of move time, 8 minutes of wait time, and 10 minutes of rework time. (All work is done by cell workers.)
Required:
a. Compute the theoretical and actual velocities per hour and the theoretical and actual cycle times (minutes per unit produced).
b. Compute the ideal and actual amounts of conversion cost assigned to each printer.
c. Calculate the current MCE.
d. If poor employee training is the root cause of wait time and move time, develop an improvement strategy as a series of if-then statements that will reduce the conversion cost per printer.

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Definitions:

Profit-maximizing Quantity

The level of output at which a firm achieves the greatest profit, determined when marginal revenue equals marginal costs.

Profit-maximizing Quantity

The quantity of a product that results in the highest possible profit for the producer, determined by the point where marginal cost equals marginal revenue.

Production Function

A mathematical relation that describes the maximum output of a good derived from different combinations of factors of production.

Cost Per Unit

The total cost incurred in producing, manufacturing, or acquiring a single unit of a specific good or service.