An Example of an Operation That Does Not Add Value

question 68

Multiple Choice

An example of an operation that does not add value is ____________________________.

• A) removing iron ore from the ground and shipping it to a steel mill
• B) filling the underground gasoline tanks at a service station
• C) making a wedding cake
• D) moving components to a warehouse for storage until the factory needs them
• E) moving luggage from a cab to the airport ticket counter

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Definitions:

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Income From Operations

Earnings derived from a company's regular business activities, excluding revenues and expenses from non-operating activities.

Break-Even Point

The level of production or sales at which revenues equal expenses, resulting in zero profit or loss.

Operating Income

Earnings before interest and taxes, presenting a company's profit from regular operational activities.