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Non-Value-Added Activities: Non-Value-Added Cost Thayne Company has 20 clerks that work in its Accounts Payable Department. A study revealed the following activities and the relative
Non-Value-Added Activities: Non-Value-Added Cost
Thayne Company has 20 clerks that work in its Accounts Payable Department. A study revealed the following activities and the relative time demanded by each activity:
Activities | Percentage of Clerical Time |
Comparing purchase orders and receiving orders and invoices | 13% |
Resolving discrepancies among the three documents | 73 |
Preparing checks for suppliers | 8 |
Making journal entries and mailing checks | 6 |
The average salary of a clerk is $41,100. |
Required:
Classify the four activities as value-added or non-value-added, and calculate the clerical cost of each activity.
Comparing documents | Non-value-added | $ |
Resolving discrepancies | Non-value-added | $ |
Preparing checks | Value-added | $ |
Mailing checks | Value-added | $ |
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