wrong answer = 5 downvote

Sale P Us Redu 60,000 Taro I Tar Ta 1. Cost Classification - VA, NVA and Grey Area - Evaluation of effect of alternative cost reduction techniques The Golmal Repair Shop repairs and services Machine Tools. Annual summary of its costs (by activity) is: 8,00,000 1. Materials and Labour for servicing Machine Tools Item A 75,000 2. Re-work Costs Item B 3. Expediting Costs caused by work delays Item C 50,000 4. Materials Handling Item D 35,000 5. Materials Procurement and Inspection Costs Item E 15,000 6. Preventive Maintenance of Equipment Item F 55,000 Item G 7. Break-down Maintenance of Equipment Required: 1. Classify each cost as Value-Added, Non-Value-Added, or in the Grey Area between. 2. For any cost classified in grey-area, assume 65% of it is Value Added and 35% is Non-Value-Added. How much of total of all seven costs is Value Added and how much is Non-Value-Added? 3. The Company is considering the following changes at the Shop - (a) introducing Quality Improvement Programs whose net effect will be to reduce re-work and expediting costs by 75% and Materials and Labour Costs for servicing Machine Tools by 5%, (b) working with Suppliers to reduce Materials Procurement and Inspection Costs by 20% and Materials Handling Costs by 25%, and (c) increasing Preventive Maintenance Costs by 50% to reduce Break-down Maintenance Costs by 40%. What is the effect of each of the above programs on Value-Added, Non-Value Added and Total Costs? Comment. 3. M 17 A Toy Company T expects to successfully launch Toy Z based on a film character. I must pay 15% Royalty on the Selling Price to the Film Company. T's targets a Selling Price of 100 per toy and Profits of 25% Selling Price. The following are the Cost data Forecast: 3/ Toy Component A Component B Labour: 0.4 hr @ 60 per hour Product Specific Overheads In addition, each Toy requires 0.6 kg of Other Materials, which are supplied at cost of 16 per kg with a normal 4% sub- standard quality which is not usable in the manufacture. You are required to determine if the above cost structure is within the Target Cost. If not, what should be the extent of Cost Reduction? 8.50 7.00 24.00 13.50