Question

111. Which of the following is a value-added activity?

Inventory control

Packaging

Repair of machines

Inspections

Answer 1

Value added activities are those activities which increases the benefits of the goods or services, or reduces the cost of goods or services. These type of activities increases the profitability of the company.

Packaging is do not increases the benefits, it only provides a better look to the goods. Also repair of machine is a regular activity which helps to maintain the machine to its original level of activity. Moreover inspection helps to reduce the errors or mistakes in the production.

Inventory control means to control the storage required by the inventory by analysing the demand so that the storage cost is reduced, also the handling cost will reduce thus reducing the cost of the product and increasing the profitability of the company.

Therefore inventory control is the value added activity.

So the correct option is 1st.