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Ch6-33b - P6-33(cont b Cost of value-added activities...

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P6-33 (cont.) b. Cost of value-added activities: Machine/labor activities $ 91,000 Cost of non-value-added activities: Setup costs $ 1,650 Cost to issue raw materials 420 Movement costs 105,000 Inspection activities 10,000 In-process carrying costs 15,000 Total costs $132,070 It appears that the company's non-value-added activities cost substantially more than its value-added activities. This offers much room for cost reductions and suggests that the company may experience difficulty competing with firms that better manage their activities. Although, rarely can all non-value-added activities be eliminated, the discussion leader was correct in stating that management should strive to eliminate as many of such costs as possible without hindering operations.
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