A Manual Process Takes 18 Minutes of Direct Labor Time

question 137

Multiple Choice

A manual process takes 18 minutes of direct labor time and six pounds of material to produce a product.Automating the process requires 12 minutes of machine time and 5 pounds of material.The cost per labor hour is $9,the cost per machine hour is $7,and the cost per pound of materials is $11. Find the nonvalue-added cost for the above situation.

• A)$2.40 per unit
• B)$9.00 per unit
• C)$12.30 per unit
• D)$1.70 per unit

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Definitions:

Taxable Gain

The profit that is subject to taxation, realized from the sale of an asset or investment.

Deductible Loss

A financial loss that can be subtracted from income for tax purposes, reducing the taxable income.

Machinery

Physical devices or tools that are used in manufacturing or industrial processes.

Tax Base

The thing that is taxed. Generally income, wealth, or consumption.