Please solve the section on the bottom where it says "Finally, calculate the total costs for each program"
The Marcovitz Repair Shop repairs and services machine tools. A summary of its costs (by activity) for 2017 is as follows: (Click the icon to view data.) Read the requirements. Requirement 1. Classify each cost as value-added, non-value-added, or in the gray area between. a. Materials and labor for servicing machine tools Value-added Non-value-added b. Rework costs Non-value-added c. Expediting costs caused by work delays d. Materials-handling costs Materials-procurement and inspection costs f. Preventive maintenance of equipment g. Breakdown maintenance of equipment e Gray area Gray area Gray area Non-value-added Requirement 2. For any cost classified in the gray area, assume 40% is value-added and 60% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? Compute the total cost for the value-added and nonvalue-added costs, then compute what percentage of the total is value-added and how much is non-value-added. Total percent Total cost of total costs Value-added $ 480,000 50 % Non-value-added 480,000 50 % $ 960,000 Total costs Requirement 3. Marcovitz is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 60% and materials and labor costs for servicing ma Begin by calculating the effect of program: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 60% and materials and labor costs for servicing machine tools by 5%. (If Value- Non-value- added added Gray area Program (a) Quality improvement programs to: reduce rework costs by 60% reduce expediting costs by 60% reduce materials and labor costs by 5% $ (90,000) (66,000) (20,000) Total effect $ (20,000) $ (156,000) Next, calculate the effect of program: (b) working with suppliers to reduce materials-procurement and inspection costs by 40% and materials-handling costs by 20%. (If a box is not used in the table, leave the box empty; do not enter a zero. Except for the last row of the table. For amounts in Value- Non-value- added added Gray area $ (34,000) Program (b) Working with suppliers to: reduce materials procurement and inspection costs by 40% reduce materials handling costs by 20% Total effect Transferring gray area costs to value-added and non-value-added (9,000) (43,000) 43,000 (17,200) $ (17,200) $ (25,800) (25,800) $ 0 Effect on value-added and non-value-added costs Now, calculate the effect of program: (c) increasing preventive maintenance costs by 50% to reduce breakdown-maintenance costs by 50%. (If a box is not used in the table, leave the box empty; do not enter a zero. Except for the last row of the table. For amounts in the last row, make sure Value- Non-value- In the added added gray area Data Table $ 35,000 Program (c) Maintenance programs to: increase preventive maintenance costs by 50% decrease breakdown maintenance costs by 50% Total effect Transferring gray area costs to value-added and non-value-added 400,000 (50,000) (50,000) 21,000 35,000 150,000 14,000 (35,000) 110,000 45,000 $ Effect on value-added and non-value-added costs 14,000 $ 0 (29,000) $ a. Materials and labor for servicing machine tools $ b. Rework costs C. Expediting costs caused by work delays d. Materials-handling costs e. Materials-procurement and inspection costs f. Preventive maintenance of equipment g. Breakdown maintenance of equipment 85,000 Finally, calculate the total costs for each program. (If a box is not used in the table, leave the box empty; do not enter a zero. Use parentheses or a minus sign to show a reduction.) 70,000 Value- Non-value- 100,000 Program added added Total Total effect of all programs (23,200) $ (210,800) Print Done Total costs for value-added and non-value-added, respectively Expected value-added and non-value-added costs as a result of these programs
