Barter Company's cost management and product costing procedures follow activity-based costing (ABC) principles. Activities have been identified and classified as being either value-added or nonvalue-added for each product. Which of the following activities, used in Barter's production process, is nonvalue-added? (CPA adapted)
A) Drill press activity.
B) Heat treatment activity.
C) Design engineering activity.
D) Raw materials storage activity.

Question

Quizplus · Accepted Answer

Raw materials storage activity is considered nonvalue-added because it does not directly contribute to the transformation of materials into a finished product and is often seen as a necessary but non-value-adding step in the production process.

Barter Company's Cost Management and Product Costing Procedures Follow Activity-Based