Reducing non-value-added costs should produce a reduction in the company’s product costs. One of the objectives of the financial perspective is reducing the unit costs of products. The Balanced Scorecard has four perspectives: financial, customer, process, and learning and growth. The unused capacity variance must reach Rs 2, 40,000 before resource spending can be reduced.Ĥ. There is no reduction in resource spending for inspecting because it must be purchased In increments of 2,000 and only 1,200 hours were saved-another 800 hours must be reduced before any reduction in resource spending is possible. Explain how non-value-added cost reduction, non-value-added cost reports, and kaizen standards might fit into the Balanced Scorecard framework. Suppose that Godrej Manufacturing has implemented the Balanced Scorecard. How much will this save in resource spending?Ĥ. Prepare kaizen standards that cap be used to evaluate the company’s progress toward this goal. Suppose that the company wants to reduce all non-value-added costs by 30 percent in the coming year. Prepare a cost report that details value-added and non-value-added costs.ģ. Also, explain why there is no activity volume or unused capacity variance for the other two activities.Ģ. Calculate the activity volume and unused capacity variances for the inspection activity. Assume that continuous improvement efforts reduce the demand for inspection by 30 percent during the year (actual activity usage drops by 30 percent). JIT aims to achieve the following objectives:ġ. ![]() Suppliers must be able to produce and deliver defect free materials or components just when they are required, and equipment must be maintained so that machine failures are eliminated. Production people must be better trained so that they can carry out their works without errors. It is required that the companies that use just-in-time manufacturing must eliminate all the sources of failure in the system. With no inventory to draw from for delivery to customers, just-in-time relies on high quality materials and production. It emphasises that workers immediately correct the system making defective units because they have no inventory. It reduces or eliminates inventory and the costs associated with carrying the inventory. ![]() JIT requires better coordination with suppliers so that materials arrive immediately prior to their use. ![]() A just-in-time manufacturing system requires making goods or service only when the customer, internal or external, requires it.
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