Discuss the relationship between setup time and utilization
What will be an ideal response?
Setup time is the time required to adjust a process when switching from making one product to another and is unproductive time in the sense that no product is being built during the setup. Utilization is the ratio of the average output rate to the maximum capacity. As output rate increases, the resource is more productive and utilization rises. Setups enable output but do not create it, so the faster a setup can be performed, the more of the total time is productive, thus increasing utilization.
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Xian Corporation predicts that if a customer pays on the first sale, it is assured that it is a reliable customer. As such, it expects that customer to generate a net profit of $700 per year for 10 years. Ajax calculates present value with a 9% rate of return. There is a 70% probability that Ajax will secure a reliable customer. However, if the customer defaults, Ajax will have to incur a loss of $800. Determine the expected benefit if credit is granted.
A) $3,004 B) $3,104 C) $2,804 D) $2,904
Both job order and process costing systems use a four-step method to track product costs. List each of the four steps
What will be an ideal response