During a recent accounting period, Falcon Express' shipping department processed 26 orders.Each order typically takes four hours to complete.However, the average time increased to ﬁve hours because of various departmental ineﬃciencies.If shipping labor is paid $14 per hour, the company's non-value-added cost would be:
A)$0.
B)$56.
C)$364.
D)$1,456.
E)$1,820.

Question

Quizplus · Accepted Answer

The total labor cost for processing 26 orders at 4 hours per order would be:
26 orders x 4 hours per order x $14 per hour = $1,456

However, due to inefficiencies, the processing time increased to 5 hours per order. Therefore, the total labor cost for processing 26 orders at 5 hours per order would be:
26 orders x 5 hours per order x $14 per hour = $1,820

The non-value-added cost is the difference between the two labor costs:
$1,820 - $1,456 = $364

Therefore, the company's non-value-added cost would be $364.

During a Recent Accounting Period, Falcon Express' Shipping Department Processed