Nonvalue-Added Costs

Lemmons Inc. has the following two activities: (1) Retesting reworked products, cost: $443,000. The retesting cost of the most efficient competitor is $225,000. (2) Welding subassemblies, cost: $675,000 (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 $540,000.

Required:

Determine the nonvalue-added cost of each activity.

	Retesting	Welding
Nonvalue-added cost:	$	$