Nonwalue Added Costs The following six situations at Diviney Manufacturing Inc. are independent Required: Estimate the nonvalue-added cost for each situation a. A manual insertion process takes 30 minutes and 8 pounds of material to produce a product. Automating the insertion process requires 15 minutes of machine time and 7.5 pounds of material. The cost per labor hours $12, the cost per machine hour is $8, and the cost per pound of materials is $10. per un b. With its original design, a gear requires 8 hours of setup time. By redesigning the gear so that the number of different grooves needed is reduced by 50, the setup time is reduced by 75%. The cost per setup hour is $50. per setup A product currently requires 6 moves. By redesigning the manufacturing layout, the number of moves can be reduced from 6 too. The cost per move is $20. per unit d. Inspection time for a plant is 16,000 hours per year. The cost of inspection consists of salaries of inspectors, totaling $320,000. Inspection also uses supplies costing 55 per inspection hour. The company eliminated most defective components by eliminating low quality suppliers. The number of production errors was reduced dramatically by installing a system of statistical process control. Further quality improvements were realized by redesigning the products, making them easier to manufacture. The net effect was to achieve a dose to zero-defect state and eliminate the need for any inspection activity per year e. Each unit of a product requires 6 components. The average number of components is 6.5 due to component failure, requiring rework and extra components. Developing relations with the night suppliers and increasing the quality of the purchased component can reduce the average number of components to 6 components per unit. The cost per component is $500. per unit a. A manual insertion process takes 30 minutes and 8 pounds of material to produce a product. Automating the insertion process requires 15 minutes of machine time and 7.5 pounds of material. The cost per labor hour is $12, the cost per machine hour is $8, and the cost per pound of materials is $10. per unit b. With its original design, a gear requires 8 hours of setup tume. By redesigning the gear so that the number of different grooves needed is reduced by So, the setup time is reduced by 75%. The cost per setup hours $50. per setup moves. By redesigning the manufacturing layout, the number of moves can be reduced from 6 to 0. The cost per move is $20. A product currently requires per unit d. Inspection time for a plant is 16,000 hours per year. The cost of inspection consists of sales of inspectors, totaling $320,000. Inspection also uses supplies costing 55 per inspection hour. The company eliminated most defective components by eliminating low quality suppliers. The number of production errors was reduced dramatically by installing a system of statistical process control. Further quality improvements were realized by redesigning the products, making them easier to manufacture. The net effect was to achieve a dose to zero-defect state and eliminate the need for any inspection activity, per year e. Each unit of a product requires 6 components. The average number of components is 0.5 due to component failure, requiring work and extra components. Developing relations with the night suppliers and increasing the quality of the purchased component can reduce the average number of components to 6 components per unit. The cost per component is $500 per unit S f. A plant produces 100 different electronic products. Each product requires an average of 8 components that are purchased externally. The components are different for each part. By redesigning the products, it is possible to produce the 100 products so that they all have 4 components in common. This will reduce the demand for purchasing, receiving and paying bills. Estimated savings from the reduced demand are $900,000 per year. per year
