Lindstrom Industries, Inc. produces chain saws, weed whackers, and lawn mowers for major retail chains. Lindstrom makes these products to order in large quantities for each customer. It has adopted activity0vased management, and its controller is in the process of developing an ABC system. The controller has identified the following primary activities of the company:

Product delivery...............................Production-assembly

Customer follow-up........................Engineering design

Materials and parts purchasing....Product inspection

Materials storage..........................Processing areas cleanup

Materials inspection.....................Product marketing

Production-drilling.......................Building maintenance

Product packaging........................Product sales

Product research..........................Product rework

Finished goods storage...............Production-grinding

Production-machine setup.........Personnel services

Materials moving.........................Production scheduling

Required

1. Identify the activities that do not add value to Lindstrom’s products.

2. Assist the controller’s analysis by grouping the value-adding activities into the activity areas of the value chain shown in Figure.

3. State whether each non-value-adding activity is necessary or unnecessary. Suggest how each unnecessary activity could be reduced or eliminated.