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1. Cost Classification - VA, NVA and Grey Area - Evaluation of effect of alternative cost reduction techniques The Golmal Repair Shop repairs and services Machine Tools All summary of its costs by activity 1. Materials and Labour for servicing Machine Tools 2. Ro work Costs 3. Expediting Costs caused by work delays 4. Materials Handling 5. Materials Procurement and inspection Costs Bm E 35.000 6. Preventive Maintenance of Equipment 15.00 7. Break down Maintenance of Equipment Required: 1 Classily each cost as Value Added Nose Added or in the Grey Area between 2 For any cost classified in grey area, anome 63% of als Value Added and 15% is Now-Value Added. How much of a of all seven costs & Value Added and how much is Non-Value Added? 3. The Company is considering the following changes at the Shop - (a) introducing Quality Improvement Programs whose met effect will be to reduce to work and expediting costs by 78% and Materials and Labour Costs for servicing Machine Tools by 5% (b) working with Suppliers to reduce Materials Procurement and Inspection Costs by 28% and Materials Handling Costs by 25%, and (c) increasing Preventive Maintenance Costs by 50% to reduce Beak-down Maintenance Costs by 40% What is the effect of each of the above programs on Value Added, Nos Value Added And Total Costs? Comment showing VA, NVA and Grey Area Costs (before and after) You are the Manager of XYZ Paper Mills and have recently substantially lower rate (by another Company ABC Ltd) than the price charged by your own mill . The Value Chain for one use of tonne of such paper for ABC Ltd is: ABC Ltd. Merchant Printer Customer. ABC Ltd sells this particular paper to Merchant at the rate of 3 1,466 per Tonne. ABC Ltd pays for the Freight which amounts to 30 per Tonne. Average Retums and Allowances amount to 4% of Sales and approximately equals 60 per Tonne. The Value Chain of your Company, through which the paper reaches the ultimate customer is similar to that of ABC Ltd. However, your Mill does not sell directly to the Merchant, the latter receiving the paper from huge Distribution Centre maintained by your Company at Haryana Shipment Costs from the Mill to the Distribution Centre is 11 per Tonne while the Operating Costs in the Distribution Center are estimated at 25 per Tonne. The Return on Investment required by the Distribution Centre for the investments made, amount to an estimate 58 per Tonne. Calculate the "Mill Manufacturing Target Cost" for this particular paper for XYZ Ltd. Assume that the return on the investment expected by XYZ Ltd is 120 per tonne of paper. A Toy Company 'T' expects to successfully launch Toy Z based on a film character. T must pay 15% Koyally Price to the Film Company. T's targets a Selling Price of 100 per toy and Profits of 25% Selling Price. The following are the Cost data Forecast: */ Toy Component A 8.50 Component B 7.00 Labour: 0.4 hr @ 60 per hour 24.00 Product Specific Overheads 13.50 In addition, each Toy requires 0.6 kg of Other Materials, which are supplied at cost of 16 per kg with a normal 4% sub- standard quality which is not usable in the manufacture. You are required to determine if the above cost structure is within the Target Cost. If not, what should be the extent of Cost Reduction