Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 51

Nonfinancial Quality Indicators ABC Mfg. is evaluating the desirability of implementing process improvements and is seeking your help in determining whether it should proceed with the proposed improvements. One area of focus is how the improvements will affect processing time (cycle-time efficiency). Estimated activities and associated times for these activities under both the current process and after process improvements are as follows:

Required
1. Determine the production (manufacturing) lead time for each of the two decision alternatives.
2. Determine the processing cycle efficiency (PCE) for each decision alternative.
3. Based on only the PCE figures calculated in requirement 2, should the company implement the proposed process improvements Why or why not
4. Why would process improvements, such as those referenced above, likely lead to improved financial results