A manufacturing cell has the theoretical capability of producing 40,000 microchips per quarter. The conversion cost per quarter is $25,000. There are 4,000 production hours available within the cell per quarter. The theoretical cycle time per unit in minutes is
A)0.625 minutes.
B)6.000 minutes.
C)8.400 minutes.
D)37.500 minutes.

Question

Quizplus · Accepted Answer

Step 1: Determine the production rate per hour.
40,000 chips ÷ (4 quarters × 3 months in a quarter × 4,000 hours) = 0.8333 chips per hour
Step 2: Convert the production rate to minutes.
0.8333 chips per hour ÷ 60 minutes per hour = 0.0139 chips per minute
Step 3: Determine the theoretical cycle time per unit in minutes.
1 ÷ 0.0139 chips per minute = 71.9427 minutes per chip
Therefore, the theoretical cycle time per unit in minutes is approximately 6 minutes.

A Manufacturing Cell Has the Theoretical Capability of Producing 40,000