Nonvalue-Added Costs
Lemmons Inc. has the following two activities: (1) Retesting reworked products, cost: $443,000. The retesting cost of the most efficient competitor is $225,000. (2) Welding subassemblies, cost: $675,000 (67,500 welding hours). A benchmarking study reveals that the most efficient level for Lemmons would use 54,000 welding hours and entail a cost of $540,000.
Required:
Determine the nonvalue-added cost of each activity.
Retesting | Welding | |
Nonvalue-added cost: | $ | $ |
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