Setup time for a product is 12 hours. A firm that uses JIT and produces the same product has reduced setup time to 1 hour. Setup labour is $6 per hour.
-Refer to the figure.What are the value-added costs?
A)$72
B)$66
C)$12
D)$6

Question

Quizplus · Accepted Answer

Value-added costs are the costs that directly contribute to the production of a product. In this case, the setup labor cost for the reduced setup time of 1 hour is $6 per hour, resulting in a value-added cost of $6.

Setup Time for a Product Is 12 Hours