Caldwel Associates prepares archilectural drawngs to conform to local structivalsafety codes Assume adminstracive and suppert costs vary w th prolessional lebor costs Cecsder tach requeresent indepesdently Reastre tequithens your answers to the noarett whole doliar) Data table Requirements 1. How much of the total costs in 2020 are value-added, non-value-added, or in the gray area between? Explain your answers briefly. What actions can Caldwell take to reduce its costs? 2. What are the consequences of misclassifying a non-value-added cost as a value-added cost? When in doubt, would you classify a cost as a value-added or non-value-added cost? Explain briefly. 3. Suppose Caldwell could eliminate all errors so that it did not need to spend any time making corrections and, as a result, could proportionately reduce professional-labor costs. Calculate Caldwell's operating income for 2020. 4. Now suppose Caldwell could take on as much business as it could complete, but it could not add more professional staff. Assume Caldwell could eliminate all errors so that it does not need to spend any time corecting errors. Assume Caldwell could use the time saved to increase revenues proportionately. Assume travel costs will remain at $14,000. Calculate Caldwell's operating income for 2020 Caldwel Associates prepares archilectural drawngs to conform to local structivalsafety codes Assume adminstracive and suppert costs vary w th prolessional lebor costs Cecsder tach requeresent indepesdently Reastre tequithens your answers to the noarett whole doliar) Data table Requirements 1. How much of the total costs in 2020 are value-added, non-value-added, or in the gray area between? Explain your answers briefly. What actions can Caldwell take to reduce its costs? 2. What are the consequences of misclassifying a non-value-added cost as a value-added cost? When in doubt, would you classify a cost as a value-added or non-value-added cost? Explain briefly. 3. Suppose Caldwell could eliminate all errors so that it did not need to spend any time making corrections and, as a result, could proportionately reduce professional-labor costs. Calculate Caldwell's operating income for 2020. 4. Now suppose Caldwell could take on as much business as it could complete, but it could not add more professional staff. Assume Caldwell could eliminate all errors so that it does not need to spend any time corecting errors. Assume Caldwell could use the time saved to increase revenues proportionately. Assume travel costs will remain at $14,000. Calculate Caldwell's operating income for 2020
