Using the original design,a machine requires 12 hours of setup time.By redesigning the machine,the setup time is reduced by 25 percent.The cost per setup hour is $225.Calculate the reduction in nonvalue-added cost per setup.
A)$675 per setup
B)$225 per setup
C)$450 per setup
D)$800 per setup
E)$2,025

Question

Quizplus · Accepted Answer

The original setup time is 12 hours. A 25% reduction means the setup time is reduced by 3 hours (25% of 12 hours). The cost per setup hour is $225, so the reduction in cost is 3 hours * $225/hour = $675 per setup.

Using the Original Design,a Machine Requires 12 Hours of Setup