Question
Nonvalue-Added Costs Lemmons Inc. has the following two activities: (1) Retesting reworked products, cost: $412,000. The retesting cost of the most efficient competitor is $225,000.
Nonvalue-Added Costs
Lemmons Inc. has the following two activities: (1) Retesting reworked products, cost: $412,000. The retesting cost of the most efficient competitor is $225,000. (2) Welding subassemblies, cost: $1,350,000 (67,500 welding hours). A benchmarking study reveals that the most efficient level for Lemmons would use 54,000 welding hours and entail a cost of $1,080,000.
Required:
Determine the nonvalue-added cost of each activity.
| Retesting | Welding | |
| Nonvalue-added cost: |
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Hong Kong Auditing Economic Theory And Practice
Authors: Simon Fung, Ferdinard A. Gul
3rd Edition
9629372347, 978-9629372347
