A firm's warranty costs are $125,000 per year.A competitor's warranty costs are $25,000 per year.Moulding costs are $50,000.What are the value-added costs?

Question

Quizplus · Accepted Answer

Value-added cost is the cost that adds value to the product or service. In this case, the warranty costs are not adding any value to the product, whereas moulding costs are essential for manufacturing the product. Therefore, the value-added costs would be the moulding costs, which are $50,000.

A Firm's Warranty Costs Are $125,000 Per Year