Each unit of product requires 16 pounds of material. Due to scrap and rework, each unit has been averaging 18 pounds of material. The material costs £4 per pound. The value-added costs are
A) £4.
B) £8.
C) £64.
D) £72.

Question

Quizplus · Accepted Answer

Value-added costs are the costs directly associated with producing the product without considering waste or inefficiency. Since each unit requires 16 pounds of material and the material costs £4 per pound, the value-added costs are 16 pounds * £4/pound = £64.

Each Unit of Product Requires 16 Pounds of Material