Question

A one-month summary of manufacturing costs for Rapid Routers Company follows.
Direct materials ................ $40,000
Direct labor ................. 20,000
Material handling costs ............. 1,500
Product inspection and rework .......... 2,000
Materials purchasing and inspection ........ 500
Routine maintenance and equipment servicing ....... 1,200
Repair of equipment ............... 300

REQUIRED
A. Classify each cost as value-added or non-value-added. Can each cost be classified in this manner? Explain.
B. Sum the non-value-added costs. What percentage of total costs is non-value-added?
C. Can any of the non-value added activities be eliminated? Explain.
D. Can any of the costs for non-value-added activities be reduced? Provide an idea for reducing one non-value-added cost.



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  • CreatedJanuary 26, 2015
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