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Anuta_ua [19.1K]
2 years ago
11

Suppose that the Dallas School District wants to achieve Six Sigma quality levels of performance in delivering students to schoo

l. They have established a 20-minute window as an acceptable range within which buses carrying students should arrive at school. a. What is the maximum allowable standard deviation of arrival times required in order to achieve this standard of quality? (Round your answer to 2 decimal places.) b. If they achieve this standard, about how many times out of a million deliveries will a bus deliver students either too early or too late? (Round your answer to 1 decimal place.)

Business
1 answer:
Kay [80]2 years ago
8 0

Answer:

a) 1.66 minutes

b) 3.4 out of million deliveries

Explanation:

So, it is a six sigma quality question, we first need to understand little bit about six sigma and how it is to achieve six sigma level.

<u>Six Sigma:</u>

It is the process or technique used by many organizations through out the world to achieve maximum quality in a product or in a service they are providing. It helps to indicate root causes of the process or you can say waste steps which first need to be identified then rectified to bring that top-notch quality in the system. So in this case, in order to calculate part a) we will calculate six sigma control limits.

a) So, for six sigma control limits, the maximum allowable standard deviation is 12 or you can say +6 + (-6) = ±6 = 12. It means all deviations must lie in all 12 standard deviations.

<em>Please refer to the table shown in the attachment.</em> This bell curve represent six sigma concept. In this <em>3 sigma quality level means all deviations must lie in 6 standard deviations.</em>

So, here we have been given that mean = 20, so with mean we can calculate standard deviation in six sigma control limits.

Maximum Allowable Standard Deviation for 6 sigma = Mean/12

                                                                                        = 20/12

                                                                                       = 1.66

So, 1.66 is the maximum allowable standard deviation of arrival times required in order to achieve 6 sigma quality level.

b) In this part, we are asked that, out of million deliveries about how many times bus deliver students too early or too late at this 6 sigma quality level.

<em>For this answer, please refer to attachment again</em>. and notice at the left bottom with the arrow of 6 sigma, we have a number 3.4 ppm means 3.4 part per million.

<em>So, it 3.4 times in a million deliveries bus will deliver students either too early or too late. </em>

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Step 1:

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Add: Direct labour per unit                                             $15              $15

Add: Variable manufacturing overhead per unit         $5               $5

Total product cost per unit                                            $45            $45  

Thus, the unit product cost under variable costing for yea 1 and year 2 is $45  

Step 2:

                       Variable costing income statement

                      For the year ended year 1 and year 2

Details                                                                       Year 1          Year 2

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Sales [ b=a x 60 each ]                                         2,400,000   3,000,000

Variable product cost [c=a*45 each]                   1,800,000    2,250,000

Variable selling and administrative costs

[d=a*$2]                                                                 80,000          1,00,000

Contribution margin [e=b-c-d]                             520,000          650,000

Fixed manufacturing overhead [f]                       250,000         250,000

Fixed selling and administrative expense [g]     80,000           80,000

Net operating income [e-f-g]                             $190,000      $320,000

Step 3:

Details                                                                  Year 1          Year 2

Direct materials per unit                                       $25              $25

Add: Direct labour per unit                                   $15               $15

Add: Variable manufacturing overhead per unit   $5              $5

Add: Fixed manufacturing overhead per unit

       Year - 1 - ($250,000 + 50,000 units)

       Year - 1 - ($250,000 + 40,000 units)               $5             $6

Total product cost per unit                                 $50.00          $51.25  

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                      Absorption Costing Income Statement

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Year - 2 - No Ending inventory                           $ -                    $ -

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Net operating income as per variable costing   $190,000  $320,000

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