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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 12, Problem 19E
Textbook Problem
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A company is spending $70,000 per year for inspecting, $60,000 per year for purchasing, and $56,000 per year for reworking products. What is a good estimate of non-value-added costs?

  1. a. $126,000
  2. b. $70,000
  3. c. $56,000
  4. d. $130,000

To determine

Identify the option showing the non-value added costs.

Explanation of Solution

Non-value added cost: Non-value added cost is the cost occurred due to the non-value-added activities. For example: cost for material handling.

Calculate the non-value added cost.

Non-value added cost=Inspecting cost+Reworking cost=$70,000

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Chapter 12 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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