The Opportunist Company Recorded the Following Activities

Essay

The Opportunist Company recorded the following activities. Determine the amount of value-added and non-value- added costs.
a. Opportunist keeps 7 days of materials inventory on hand to avoid shutdowns due to materials shortages. Carrying costs are $50,000 per day.
b. A time-and-motion study revealed that it should take 10 minutes to produce a product that now takes 50 minutes to produce. Labor is $18 per hour.
c. Warranty work costs the firm $500,000 per year. Warranty costs for the industry average $100,000 per year.