Question

Estimate the nonvalue-added cost for each situation. a. A manual insertion process takes 30 minutes and 8 pounds of material to produce a product. Automating the insertion process requires 15 minutes of machine time and 7.5 pounds of material. The cost per labor hour is $12, the cost per machine hour is $8, and the cost per pound of materials is $10. $ per unit b. With its original design, a gear requires 8 hours of setup time. By redesigning the gear so that the number of different grooves needed is reduced by 50%, the setup time is reduced by 75%. The cost per setup hour is $50. $ per setup c. A product currently requires 6 moves. By redesigning the manufacturing layout, the number of moves can be reduced from 6 to 0. The cost per move is $20. $ per unit d. Inspection time for a plant is 16,000 hours per year.

Answer 1

To estimate the nonvalue-added cost, calculate the difference in labor cost and material cost for each situation and multiply by the relevant cost per unit or hour.

Step-by-step explanation:

In situation a, the nonvalue-added cost can be estimated by calculating the difference in labor cost and material cost between the manual and automated process. The nonvalue-added cost per unit would be ($12 per labor hour x 0.5 hour difference) + ($10 per pound of material x 0.5 pound difference).

In situation b, the nonvalue-added cost can be estimated by calculating the difference in setup time between the original design and the redesigned gear. The nonvalue-added cost per setup would be ($50 per setup hour x 8 hour difference).

In situation c, the nonvalue-added cost can be estimated by multiplying the reduction in moves (6 moves to 0 moves) by the cost per move ($20 per move).

In situation d, there is no specific information provided to estimate the nonvalue-added cost.