A product currently requires 5 moves. By changing the plant layout, the number of moves can be reduced to 1. The cost per move is $30. Calculate the reduction in nonvalue-added cost of the moving activity.
A) $7.50
B) $30
C) $0
D) $120
E) $150

Question

Quizplus · Accepted Answer

Before the change in plant layout, the nonvalue-added cost of the moving activity was:
5 moves * $30/move = $150

After the change in plant layout, the nonvalue-added cost of the moving activity is:
1 move * $30/move = $30

Therefore, the reduction in nonvalue-added cost of the moving activity is:
$150 - $30 = $120

So, the answer is D, $120.

A Product Currently Requires 5 Moves