Answered: Explain the difference between…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 9Q: Explain the difference between prime costs and conversion costs.

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Explain the difference between value-added time and nonvalue-
added time.

Expert Solution

Step 1

Value-added time:-

Value added time is the time spent that improves the outcome of a method. this can be usually simply the processing time related to production.
All of the other intervals related to a method, like wait time and queue time, contribute nothing to the result so are thought of non-value more time.
This concept is employed to identify non price more activities and eliminate them from a method, so the entire time needed to complete a method is reduced.
When the period of the production method has been shrunken during this manner, it will be a competitive advantage, since a business will respond additional quickly to customer demands.
It may be potential to compress the quantity useful more time during a method. However, it's typically easier to first eliminate or cut back non-value more time, since it includes such a large a part of the entire interval.

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