(VA and NVA) Lawrence Co. is experiencing a problem with schedule changes in its Toledo plant. To help assess the financial impact of the prob¬ lem, you have gathered the following information on the activities, estimated times, and average costs required for a single schedule change.

a. Which of these, if any, are value-added activities?

b. What is the cost driver in this situation?

c. How can the cost driver be controlled and the activities eliminated?LO1.

Transcribed Image Text:

Activity Review impact of orders Reschedule orders Reschedule production orders Est. Time 30 min-2 hrs 15 min-24 hrs Average Cost $ 300 800 15 min-1 hr Stop production and change over 10 min-3 hrs 75 150 Return and locate material (excess inventory) 20 min-6 hrs Generate new production paperwork 15 min-4 hrs 1,500 500 Change purchasing schedule 10 min-8 hrs 2,100 Collect paperwork from the floor 15 min 75 Review new line schedule Overtime premiums Total 15 min-30 min 3 hrs-10 hrs 100 1,000 $6,600