Homework: Chapter 14 Pricing Decisions Question 2, E14-17 (similar to) Part 1 of 7 HW Score: 0%, 0 of 15 points O Points: 0 of 4 Save The Magna Repair Shop repairs and services machine tools. A summary of its costs (by activity) for 2020 is as follows: (Click the icon to view data.) Question list Read the requirements. Question 1 Question 2 Question 3 Requirement 1. Classify each cost as value-added, non-value-added, or in the gray area between. a. Materials and labor for servicing machine tools b. Rework costs c. Expediting costs caused by work delays d. Materials-handling costs e. Materials-procurement and inspection costs Question 4 f. Preventive maintenance of equipment Question 5 g. Breakdown maintenance of equipment Requirements Data table 1. Classify each cost as value-added, non-value-added, or in the gray area between. 2. For any cost classified in the gray area, assume 96% is value-added and 4% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? 3. Magna is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 60% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 10% and materials-handling costs by 30%; and (c) increasing preventive-maintenance costs by 70% to reduce breakdown-maintenance costs by 50%. Calculate the effect of programs (a). (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly. a. Materials and labor for servicing machine tools $1,000,000 b. Rework costs 120,000 c. Expediting costs caused by work delays d. Materials-handling costs 70,000 65,000 e. Materials-procurement and inspection costs 105,000 80,000 110,000 f. Preventive maintenance of equipment g. Breakdown maintenance of equipment Print Done - X