[Latvian]

15. LO.1 (Activity analysis) Th e Raleigh plant manager of Allentown Corp. Has noticed

The plant frequently changes the schedule on its production line. He has gathered the

Following information on the activities, estimated times, and average costs required for

A single schedule change.

Activity Est. Time Average Cost

Review impact of orders 30 min.–2 hrs. $ 300

Reschedule orders 15 min.–24 hrs. 800

Reschedule production orders 15 min.–1 hr. 75

Stop production and change over 10 min.–3 hrs. 150

Return and locate material (excess inventory) 20 min.–6 hrs. 1,500

Generate new production paperwork 15 min.–4 hrs. 500

Change purchasing schedule 10 min.–8 hrs. 2,100

Collect paperwork from the fl oor 15 min. 75

Review new line schedule 15 min.–30 min. 100

Overtime premiums 3 hrs.–10 hrs. 1,000

Total $6,600

A. Which of these, if any, are value-added activities?

B. What is the cost driver in this situation?

C. How can the cost driver be controlled and the NVA activities eliminated?