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The Mack Repair Shop repairs and services machine tools. A summary of its costs (by activity) for 2017 is as follows: (Click the icon to
The Mack 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. Data table Requirements 1. Classify each cost as value-added, non-value-added, or in the gray area between. 2. For any cost classified in the gray area, assume 24% is value-added and 76% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? 3. Mack is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 50% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 10% and materials-handling costs by 20%; and (c) increasing preventive-maintenance costs by 50% to reduce breakdown-maintenance costs by 30%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly
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