A firm's warranty costs are $375,000 per year. A competitor's warranty costs are $175,000 per year. The non-value-added costs are

Question

Quizplus · Accepted Answer

Non-value-added costs refer to any costs that do not add value to the customer or the product. Warranty costs can be considered non-value-added costs as they are incurred due to defects or issues with the product. Therefore, the non-value-added costs in this scenario would be the sum of the firm's and competitor's warranty costs, which is $375,000 + $175,000 = $550,000. The difference between the two costs is irrelevant when considering non-value-added costs.

A Firm's Warranty Costs Are $375,000 Per Year