Question

pany using activity-based manavement identify cach of the following activities as (V) value-added or (N) nonvalue-added. (8 Points) 1. Designing car seats to maximize comfort. 2. Storing additional materials for future production 3. Special packaging of products for safety reasons. 4. Scrapping defective production materials. 5. Assembling lawn mowers at the local hardware store. 6. Moving parts from storage to the factory for manufacturing. 25. Theron Industries has the following financial data related to its quality control program. Initial raw materials inspection Product inspection Product warranty Scrap Rework Quality training Total $ 150,000 300,000 1.575,000 960,000 720,000 75,000 $ 3.780.000 Required: Identify which costs and amounts are prevention, appraisal, internal failure or external failure. (8 Points)

Answer 1

24) 1) Value added activity, as it improves product's quality and performance 2) Non-Value added activity, as it does not improves product's quality and performance 3) Value added activity, as it improves perceived value for customers 4) Non-Value added activity, as it doesn't improves perceived value for customers 5) Non-Value added activity, as it doesn't improves perceived value for customers 6) Non-Value added activity, as it doesn't improves perceived value for customers 25) Particualrs Prevention Cost Internal failure cost External failure cost Appriasal Cost 150,000 300,000 1,575,000 Initail raw material inspection Product inspection Product warranty Scrap Rework Quality training 960,000 720,000 75,000 75,000 450,000 1,680,000 1,575,000