Using the original design, a machine requires 24 hours of setup time. By redesigning the machine, the setup time is reduced by 35%. The cost per setup hour is $250. What is the new reduced non-value-added cost per setup?
A) $87.50 per setup
B) $2,000.00 per setup
C) $3,900.00 per setup
D) $6,000.00 per setup

Question

Quizplus · Accepted Answer

The original setup time is 24 hours. A 35% reduction means the setup time is reduced by 8.4 hours (24 * 0.35 = 8.4), resulting in a new setup time of 15.6 hours (24 - 8.4 = 15.6). The cost per setup hour is $250, so the new cost is 15.6 hours * $250/hour = $3,900.00 per setup.

Using the Original Design, a Machine Requires 24 Hours of Setup