EXERCISE 10-6 (20 MINUTES)

5. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD
5. If all queue time in production is eliminated, then the throughput time drops to only 4 days (2.7 + 0.3 + 1.0). The MCE becomes: -Value added time 2.7 daysMCE = = = 0.675Throughput time 4.0 days Thus, the MCE increases to 67.5%. This exercise shows quite dramati-cally how the JIT approach can improve the efficiency of operations and reduce throughput time.