Final answer:
The non-value-added cost due to inefficiencies in Marty’s shipping department is calculated by the extra time taken multiplied by the number of orders and the hourly wage, resulting in $364.
Step-by-step explanation:
The question asks to calculate the company’s non-value-added cost due to departmental inefficiencies in Marty’s shipping department. Non-value-added costs are expenses that do not contribute to the customer’s value or the product’s value. In this scenario, we have a shipping department that would typically process orders in four hours, but due to inefficiencies, it’s taking five hours. With a wage of $14 per hour, we can calculate the additional cost incurred by the extra hour per order.
To find the non-value-added cost, we multiply the extra hour of inefficiency by the number of orders and the cost per hour. Since each order is taking an extra hour due to inefficiencies (5 hours instead of 4 hours), and there were 26 orders processed:
Extra hours per order = 5 hours - 4 hours = 1 hour
Number of orders = 26
Cost per hour = $14
Non-value-added cost = Extra hours per order × Number of orders × Cost per hour
Non-value-added cost = 1 hour × 26 orders × $14 per hour
Non-value-added cost = $364
Therefore, the correct answer is C. $364.