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Tavarek Industries Has the Theoretical Capability to Produce 127,500 Units

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Essay

Tavarek Industries has the theoretical capability to produce 127,500 units per month but currently produces 102,000 units. The conversion cost for the month is $3,750,000. There are 8,500 production hours available within the plant per month. In addition to processing time, to produce a unit takes 15 minutes of move time and 10 minutes of wait time.
Required:
1. Compute the theoretical and actual velocities per hour
2. Compute the theoretical and actual cycle times (minutes per unit produced)
3. Compute the current MCE


Definitions:

Total Variable Cost

The entire expense that varies directly with changes in production volume, including materials, labor, and other costs that increase or decrease with output level.

Relevant Range

The spectrum of operations where the premises regarding constant and fluctuating expenses hold true.

Sales Commissions

A portion of the selling price that is paid to sales employees as a reward for making sales or reaching targets.

Sales Volume

The total quantity of goods or services sold in a particular time period.

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