80.2K

Verified Solution

Link Copied!

Process Activity Analysis

Brite Beverage Company bottles soft drinks into aluminum cans. The manufacturing process consists of three activities:

Mixing: water, sugar, and beverage concentrate are mixed.

Filling: mixed beverage is filled into $12-$oz$.$ cans.

Packaging: properly filled cans are boxed into cardboard $$fridge packs.$$

The activity costs associated with these activities for the period are as follows:

Line Item Description Amount

Mixing $$341,000$

Filling $303,000$

Packaging $161,000$

Total $$805,000$

The activity costs do not include materials costs, which are ignored for this analysis. Each can is expected to contain $12$ ounces of beverage. Thus, after being filled, each can is automatically weighed. If a can is too light, it is rejected, or $$kicked$,$ from the filling line prior to being packaged. The primary cause of kicks is heat expansion. With heat expansion, the beverage overflows during filling, resulting in underweight cans.

This process begins by mixing and filling $11,960,000$ cans during the period, of which only $11,500,000$ cans are actually packaged. $460,000$ cans are rejected due to underweight kicks.

A process improvement team has determined that cooling the cans prior to filling them will reduce the amount of overflows due to expansion. After this improvement, the number of kicks is expected to decline from $460,000$ cans to $115,000$ cans, thus increasing the number of filled cans to $11,845,000[11,500,000+(460,000115,000)].$

Answer & Explanation Solved by verified expert

See Answer