During a recent accounting period, Marty\'s shipping department processed 26 ord

Question

1. During a recent accounting period, Marty's shipping department processed 26 orders.  Each order typically takes four hours to complete; however, the average time increased to five hours because of various departmental inefficiencies.  If shipping labor is paid $14 per hour, the company's non-value-added cost would be: $0 $56 $364 $1,456 $1,820

During a recent accounting period, Marty's shipping department processed 26 orders.  Each order typically takes four hours to complete; however, the average time increased to five hours because of various departmental inefficiencies.  If shipping labor is paid $14 per hour, the company's non-value-added cost would be: $0 $56 $364 $1,456 $1,820 During a recent accounting period, Marty's shipping department processed 26 orders.  Each order typically takes four hours to complete; however, the average time increased to five hours because of various departmental inefficiencies.  If shipping labor is paid $14 per hour, the company's non-value-added cost would be: $0 $56 $364 $1,456 $1,820 $0 $56 $364 $1,456 $1,820

Explanation / Answer

the orders processed by shipping departement =26 orders

shipping labour cost = $14 per hour

standard time to complete an order   = 4 hours

actual time to complete an order        = 5 hours

   abnormal idle time per order due to departmental inefficiencies = 1 hour (5hrs-4hrs)

    abnorma idle time for orders processed       = 26 orders*1 hour per order

                                                                                            = 26hrs.

             non-value-added cost = 26hours * $14 per hr.

                                                      

                                                      = $364

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