DEH Corporation recently conducted a value-added analysis as part of a business process management project. Results showed that each unit of product absorbed the following costs: assembly, $5.00; quality checking, $2.00; machine depreciation, $3.00. By eliminating any non-value added activity, DEH could reduce its unit cost from $10.00 to:

Question

Quizplus · Accepted Answer

According to the given information, the total cost per unit of product is $10.00. Out of this, the non-value added activities cost $7.00 (assembly $5.00, quality checking $2.00, and machine depreciation $3.00). Thus, if DEH could eliminate these non-value added activities, the cost per unit would be reduced by $7.00, resulting in a total unit cost of $3.00 ($10.00 - $7.00). Therefore, the correct answer is C) $8.00.

DEH Corporation Recently Conducted a Value-Added Analysis as Part of a Business