Inspection time for a plant is 12,000 hours per year.The cost of inspection consists of salaries of four inspectors, totaling $65,000.Inspection also uses supplies costing $4 per inspection hour.The company has a close to zero-defect state and has eliminated the need for any inspection activity.Calculate the nonvalue-added cost of inspection per year.
A) $30,000
B) $60,000
C) $113,000
D) $120,000

Question

Quizplus · Accepted Answer

Nonvalue-added cost of inspection per year = Salaries of four inspectors + (Cost of supplies per inspection hour × Inspection time for the plant per year)
$65,000 + ($4 × 12,000 hours) = $113,000

Inspection Time for a Plant Is 12,000 Hours Per Year