Alpha, Inc

Multiple Choice

Alpha, Inc., manufactures Product A. The setup time for each unit of Product A is 8 hours. Gamma, Inc., that uses the just-in-time system and produces the same product has reduced setup time by 1 hour. Setup labor is $35 per hour. If Alpha wants to reduce non-value-added costs by 30 percent next year, compute the currently attainable standard for setup time. (Round answer to one decimal place.)

A) 4.5 hours
B) 7.3 hours
C) 6.2 hours
D) 5.9 hours