Question

Flagler Corporation takes eight hours to complete the setup process for a certain electrical component, with the setup cost averaging $150 per hour. If the company's competitor can accomplish the same process in six hours, Flagler’s non-value-added cost would be:A. $0.B. $150.C. $300.D. $900.E. $1,200.

Answer 1

Answer:

Option (c) $300

Explanation:

Data provided in the question:

Time taken to complete the setup process for a certain electrical component

= 8 hours

Average setup cost = $150 per hour

Time taken to complete the process by competitor company = 6 hours

Now,

Flagler’s non-value-added cost

= (Difference in time taken by the companies) × Average setup cost

or

Flagler’s non-value-added cost = ( 8 - 6 ) × 150

or

Flagler’s non-value-added cost = 2 × 150

or

Flagler’s non-value-added cost  = $300

Hence,

Option (c) $300