Setup Time for a Product Is 12 Hours

question 83

Multiple Choice

Setup time for a product is 12 hours. A firm that uses JIT and produces the same product has reduced setup time to 1 hour. Setup labour is £6 per hour. The nonvalue-added costs are

• A) £72.
• B) £66.
• C) £12.
• D) £6.

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Definitions:

Semi-Annually Compounded

Interest calculation method where the interest is added to the principal on a half-yearly basis.

Nominal Rate

The stated interest rate of a bond or loan, not accounting for inflation or compounding effects, also known as the annual percentage rate (APR).

Compounded Monthly

An interest calculation method where interest earned is added to the principal each month, affecting subsequent interest calculations.

Effective Rate

The actual annual interest rate that accounts for compounding over a given period, providing a true reflection of the financial cost or benefit.