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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Which of the following are nonvalue-added activities?

  1. a. Moving goods
  2. b. Storing goods
  3. c. Inspecting finished goods
  4. d. Reworking a defective product
  5. e. All of these.

To determine

Identify amongst the given options, activities that are considered as non-value added activities.

Explanation

Value-Added Activities:

Activities that are necessary to be performed and cannot be eliminated are referred as value-added activities. Properties of value-added activities are, that these activities change the state which could not occur because of preceding activities, and these activities are necessary for other activities.

e.

Moving, storing, inspecting finished goods, and reworking a defective product. All these activities can be eliminated; since, these activities do not change state of the goods and are not essential for other activities to be performed. Therefore, this is the correct option.

a.

Moving goods between departments can be eliminated by using a cellular structure in which, processing activities are conducted continuously by placing machineries which would reduce or eliminate moving time.

This activity, as well as activities that are mentioned in other options, are non-value added activities. Therefore, this is not the correct option...

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