A Time-And-Motion Study Revealed That It Should Take 2 Hours

question 123

Multiple Choice

A time-and-motion study revealed that it should take 2 hours to produce a product that currently takes 6 hours to produce. Labor is $8 per hour.
The value-added costs are

• A)$48.
• B)$32.
• C)$16.
• D)$-0-.

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Definitions:

Profit Difference

The change in profit resulting from differences in sales, costs, or other financial factors between two periods.

Activity-Based Costing

A costing method that assigns costs to products or services based on the activities required to produce them, aiming to provide more accurate product costing.

Relevant Cost Decision Model

A decision-making tool that focuses on the costs directly related to a specific business decision, ignoring sunk costs and irrelevant expenses.

Recognises Revenues

The process of recording income in the financial statements when it is earned, according to the criteria set out in accounting standards.