For each following activity, determine the amount of value-added and nonvalue-added costs.
a.
The company keeps 7 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs are £50,000 per day.
b.
A time-and-motion study revealed that it should take 10 minutes to produce a product that now takes 50 minutes to produce. labour is £18 per hour.
c.
Warranty work costs the firm £500,000 per year. Warranty costs for the industry average £100,000 per year.

Question

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The Answer of For each following activity, determine the amount of value-added and nonvalue-added costs.
a.
The company keeps 7 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs are £50,000 per day.
b.
A time-and-motion study revealed that it should take 10 minutes to produce a product that now takes 50 minutes to produce. labour is £18 per hour.
c.
Warranty work costs the firm £500,000 per year. Warranty costs for the industry average £100,000 per year.

For Each Following Activity, Determine the Amount of Value-Added and Nonvalue-Added