Rework, a non-value-added activity, is part of Jorgensen Manufacturings assembly process. Testing often revealed that one or

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Rework, a non-value-added activity, is part of Jorgensen Manufacturing’s assembly process. Testing often revealed that one or more components (almost always sourced from outside suppliers) had failed. At the end of 2006, Jorgensen initiated efforts designed to buy higher-quality components. Consequently, the demand for the rework activity was expected to decrease. The following data pertain to the reordering activity for the years 2006 and 2007:

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Required:
1. Identify the output measure for the rework activity.
2. Calculate the productivity profile and the profit-linked measure for the rework activity. Is reducing the demand for a non-value-added activity the correct decision?
Does this benefit show up in the productivity measure? Explain.

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Related Book For  book-img-for-question

Cost Management Accounting And Control

ISBN: 9780324233100

5th Edition

Authors: Don R. Hansen, Maryanne M. Mowen

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