Each unit of product requires 16 kilograms of material.Due to scrap and rework,each unit has been averaging 18 kilograms of material.The material costs $4 per pound.What are the value-added costs?
A)$4
B)$8
C)$64
D)$72

Question

Quizplus · Accepted Answer

Value-added costs only take into account the costs of materials that are actually used in production. In this case, each unit should only require 16 kilograms of material. However, due to scrap and rework, each unit is using an average of 18 kilograms of material. The value-added costs will only include the cost of the 16 kilograms that are actually used, which is $64 (16 kg * $4/kg). Therefore, the best choice is C.

Each Unit of Product Requires 16 Kilograms of Material