Financial and Managerial Accounting: PR(27)12-2A Gourmet Helper Appliance Company

Financial and Managerial Accounting

PR(27)12-2A Lead Time
Gourmet Helper Appliance Company manufactures home kitchen appliances. The manufacturing process includes stamping, final assembly, testing and shipping. In the stamping operation, a number of individuals are responsible for stamping the steel outer surface of the appliance. The stamping operation is set up prior to each run. A run of 75 stamping is completed after each setup. A setup requires 40 minutes the parts wait for the setup to be completed before stamping begins. Each stamping requires 5 minutes of operating time. After each batch is completed, the operator moves stamp the stamped covers to the final assembly area. This move takes 10 minutes to complete.
The final assembly for each appliance unit requires 18 minutes and is also done in batches of 75 appliance units. The batch of 75 appliance units is moved into the test building, which is crossed street. The move takes 25 minutes. In the final test, the 75 unit batch is tested one at a time. Each test requires 6 minutes. The completed units are sent to shipping for packaging and final shipment to customers. A complete batch of 75 units is sent from final assembly to shipping. The shipping department is located next to final assembly. Thus, there is no move time between these two operations. Packaging and shipment labeling requires 10 minutes per unit.

Instructions:
1. Determine the amount of value added and no value added lead time and the value added ratio in this ratio in the process for an average kitchen appliance in the batch of 75 units. Round percentages to one decimal places. Categorize the non value added time into wait and move time.
2. How could these process be improved so as to reduce the amount of waste in the process?
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