Nonvalue-Added Costs

Boothe Inc. has the following two activities: (1) Retesting reworked products, cost: $480,000. The retesting cost of the most efficient competitor is $150,000. (2) Welding subassemblies, cost: $900,000 (45,000 welding hours). A benchmarking study reveals that the most efficient level for Boothe would use 36,000 welding hours and entail a cost of $720,000.

Required:

Determine the nonvalue-added cost of each activity.

	Retesting	Welding
Nonvalue-added cost:	$