A manual process takes 18 minutes of direct labor time and six pounds of material to produce a product.Automating the process requires 12 minutes of machine time and 5 pounds of material.The cost per labor hour is $9,the cost per machine hour is $7,and the cost per pound of materials is $11. Find the nonvalue-added cost for the above situation.
A)$2.40 per unit
B)$9.00 per unit
C)$12.30 per unit
D)$1.70 per unit

Question

Quizplus · Accepted Answer

Nonvalue-added cost is the difference in cost between the manual and automated processes. Manual cost: (18/60)*$9 + 6*$11 = $2.70 + $66 = $68.70. Automated cost: (12/60)*$7 + 5*$11 = $1.40 + $55 = $56.40. Nonvalue-added cost: $68.70 - $56.40 = $12.30 per unit.

A Manual Process Takes 18 Minutes of Direct Labor Time