A study of time and movement revealed that it must take 3 hours to produce a pro
ID: 2304103 • Letter: A
Question
A study of time and movement revealed that it must take 3 hours to produce a product that currently takes 7 hours to produce. The work is $ 9 per hour.
a) Costs without added value are
The Mason company maintains 20 days of inventory of materials on hand to avoid stops due to the shortage of materials. Average transportation costs of $ 4,000 per day. Bach, Inc., a competitor, keeps 10 days of inventory in hand, and the average competitor's transportation costs of $ 2,000 per day.
b) Value-added costs are (be sure to clearly label each response and show all work)
Explanation / Answer
a] Costs without added value = $ 9 *(7-3) = $ 36 per product
or 36/7 = $ 5.14 per hour
b] Value added cost = 20*$ 4,000 = $ 80,000
value added cost = 10*$ 2,000 = $ 20,000
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