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 non-value-added costs are
A)$8.
B)$4.
C)$64.
D)$72.

Question

Quizplus · Accepted Answer

Non-value-added costs are the costs of waste, including materials not used in the final product. Here, the waste is the extra 2 pounds of material (18 pounds used - 16 pounds required) per unit. At $4 per pound, the non-value-added costs are 2 pounds * $4/pound = $8.

Each Unit of Product Requires 16 Pounds of Material