the following information is related to manufacturing office furniture at Outrea

Question

the following information is related to manufacturing office furniture at Outreach, Inc.: a. Accept and arrange raw materials in inventory—1 day. b. Store raw materials in inventory—5 days. c. Issue raw materials to various points in the production process—1 day. d. Use raw materials to manufacture finished goods—3 days. e. Store finished goods—8 days. f. Prepare finished goods for shipping—1 day. Compute the manufacturing efficiency ratio at Outreach when preparing for shipping is considered a (i) Non-value-added activity, (ii) Value-added activity.

Explanation / Answer

Value added Activity Time Non Value added Activity Time Accept and arrange raw materials in inventory 1 Store raw materials in inventory 5 Issue raw materials to various points in the production process 1 Use raw materials to manufacture finished goods 3 Store finished goods 8 Prepare finished goods for shipping 1 Total 4 15 manufacturing efficiency ratio = value added time / throughput time manufacturing efficiency ratio = 4 days / 19 days = 0.21

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