O c. $22.80 o d. $15.75 o e. $10.00 QUESTION 23 4.00000 A manual process takes 2
ID: 2332445 • Letter: O
Question
O c. $22.80 o d. $15.75 o e. $10.00 QUESTION 23 4.00000 A manual process takes 20 minutes of direct labor time and S pounds of material to produce a product. Automating the process requires 16 minutes of machine time and 6 pounds of material. The cost per labor hour is S10, the cost per machime hour is $8, and the cost per pound of materials is $12. Find the nonvalue-adiad cost for the given situation. (Note Round all calculations and the answer to tuwo decimal places.) o a. $22.40 per unit e b. $9.00 per unit c. S25.20 per unit G d. $1.70 per unit Click Sore and Submit to save and submit. Click Save Air Answers to sove all answers Save Al AcwerExplanation / Answer
Correct Answer -----(c ) $25.20
Calculations and Explanation
Non value added cost calculation
Total Labor cost
Resources
Cost per Resource
Total Cost
Direct labor time
20 min
$ 0.1666666
$ 3.33
Material used by direct labor
8 Pounds
$ 12.00
$ 96.00
Total Cost
$ 99.33
Total Machine Cost
Resources
Cost per Resource
Total Cost
Direct Machine Hours
16 min
$ 0.1333333
$ 2.13
Material used by machine
6 Pounds
$ 12.00
$ 72.00
Total Cost
$ 74.13
Non value added cost (99.33-74.13)
$ 25.20 per Unit
Non value added cost is a cost that only increase cost but not increase value to product. Such as wood used in manufacturing a chair is a value added cost but repair of a chair broken in workshop is a non value added cost.
In the given question, a product is produced by labor and machine. Results by both are same but cost is more when labor is used, the excess cost used by labor is non value added cost because it does not bring any extra benefit to the product.
Non value added cost calculation
Total Labor cost
Resources
Cost per Resource
Total Cost
Direct labor time
20 min
$ 0.1666666
$ 3.33
Material used by direct labor
8 Pounds
$ 12.00
$ 96.00
Total Cost
$ 99.33
Total Machine Cost
Resources
Cost per Resource
Total Cost
Direct Machine Hours
16 min
$ 0.1333333
$ 2.13
Material used by machine
6 Pounds
$ 12.00
$ 72.00
Total Cost
$ 74.13
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