A company spends $12,000 a year for inspecting, $41,000 for purchasing, and $22,000 for reworking products. A good estimate of nonvalue-added costs would be:
A) $22,000
B) $34,000
C) $41,000
D) $33,000
E) $55,000

Question

Quizplus · Accepted Answer

Nonvalue-added costs refer to expenses in the manufacturing process that do not add value to the final product or service. Inspecting and reworking costs can be considered nonvalue-added costs, while purchasing is necessary to acquire raw materials and add value to the final product. Therefore, the nonvalue-added costs in this scenario would be $12,000 + $22,000 = $34,000, making option B the best choice.

A Company Spends $12,000 a Year for Inspecting, $41,000 for Purchasing