A time-and-motion study revealed that it should take 3 hours to produce a product that currently takes 7.5 hours to produce. Labor is $18 per hour. The non-value-added costs are
A)$27.
B)$54.
C)$81.
D)$0.

Question

Quizplus · Accepted Answer

Non-value-added costs are the costs associated with the time that exceeds the standard time to produce a product. In this case, the excess time is 7.5 hours - 3 hours = 4.5 hours. The cost of this non-value-added time is 4.5 hours * $18/hour = $81.

A Time-And-Motion Study Revealed That It Should Take 3 Hours