1. The Machi Repair Shop repairs and services machine tools. A summary of its costs (by activity) for 2017 is as follows: 1(Click the icon to view data.) Read the requirements. Requirement 1. Classify each cost as value-added, non-value-added, or in the gray area between. a. Materials and labor for servicing machine tools b. Rework costs c. Expediting costs caused by work delays d. Materials-handling costs e. Materials-procurement and inspection costs f. Preventive maintenance of equipment g. Breakdown maintenance of equipment (1) (2) (3) (4) (5) (6) (7) Requirement 2. For any cost classified in the gray area, assume 15% is value-added and 85% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? Compute the total cost for the value-added and nonvalue-added costs, then compute what percentage of the total is value-added and how much is non-value-added. Total percent Total cost of total costs Value-added % % Print Non-value-added Total costs Requirement 3. Machi is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 60% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 50% and materials-handling costs by 40%; and (c) increasing preventive-maintenance costs by 40% to reduce breakdown-maintenance costs by 60%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly. Begin by calculating the effect of program: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 60% and materials and labor costs for servicing machine tools by 5%. (If a box is not used in the table, leave the box empty; do not enter a zero. Use parentheses or a minus sign to show a reduction.) Program Value- Non-value- added added Gray area Program added added Gray area Print (a) Quality improvement programs to: reduce rework costs by 60% reduce expediting costs by 60% reduce materials and labor costs by 5% Total effect Next, calculate the effect of program: (b) working with suppliers to reduce materials-procurement and inspection costs by 50% and materials-handling costs by 40%. (If a box is not used in the table, leave the box empty; do not enter a zero. Except for the last row of the table. For amounts in the last row, make sure to enter a "0" for any zero balance. Use parentheses or a minus sign to show a reduction.) Program (b) Working with suppliers to: reduce materials procurement and inspection costs by 50% reduce materials handling costs by 40% Total effect Value- added Non-value- added Gray area Transferring gray area costs to value-added and non-value-added Effect on value-added and non-value-added costs Now, calculate the effect of program: (c) increasing preventive-maintenance costs by 40% to reduce breakdown-maintenance costs by 60%. (If a box is not used in the table, leave the box empty; do not enter a zero. Except for the last row of the table. For amounts in the last row, make sure to enter a "0" for any zero balance. Use parentheses or a minus sign to show a reduction.) Program (c) Maintenance programs to: increase preventive maintenance costs by 40% decrease breakdown maintenance costs by 60% Total effect Transferring gray area costs to value-added and non-value-added Effect on value-added and non-value-added costs Value- Non-value- In the added added gray area Effect on value-added and non-value-added costs Finally, calculate the total costs for each program. (If a box is not used in the table, leave the box empty; do not enter a zero. Use parentheses or a minus sign to show a reduction.) Total effect of all programs Program Total costs for value-added and non-value-added, respectively Expected value-added and non-value-added costs as a result of these programs Value- Non-value- added added Total Comment briefly. (Round the percentages to the nearest whole percent.) (8) a total of $ (9) to % and value-added costs (10) to %. If these programs are implemented in 2017, total costs would The percentage of non-value-added costs 1: Data Table a. Materials and labor for servicing machine tools b. Rework costs $ 500,000 150,000 c. Expediting costs caused by work delays d. Materials-handling costs 75,000 50,000 e. Materials-procurement and inspection costs 60,000 f. Preventive maintenance of equipment g. Breakdown maintenance of equipment 40,000 75,000 Print 2: Requirements 1. Classify each cost as value-added, non-value-added, or in the gray area between. 2. For any cost classified in the gray area, assume 15% is value-added and 85% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? 3. Machi is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 60% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 50% and materials-handling costs by 40%; and (c) increasing preventive-maintenance costs by 40% to reduce breakdown-maintenance costs by 60%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly. (1) O 000 0000 Gray area Non-value-added Value-added (8) decrease increase OOOO Gray area Non-value-added Value-added decrease increase (10) O O decrease O increase OOOO Gray area Non-value-added O Value-added (4) O Gray area Non-value-added O Value-added OOOO Gray area Non-value-added O Value-added Gray area Non-value-added O Value-added Gray area Non-value-added O Value-added Requirements Data table - 1. Classify each cost as value-added, non-value-added, or in the gray area between. 2. For any cost classified in the gray area, assume 15% is value-added and 85% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? 3. Machi is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 60% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 50% and materials-handling costs by 40%; and (c) increasing preventive-maintenance costs by 40% to reduce breakdown-maintenance costs by 60%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly. a. Materials and labor for servicing machine tools $ 500,000 b. Rework costs 150,000 c. Expediting costs caused by work delays d. Materials-handling costs 75,000 50,000 e. Materials-procurement and inspection costs f. Preventive maintenance of equipment 60,000 40,000 75,000 g. Breakdown maintenance of equipment Print Done Print Done