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The Marcovitz Repair Shop repairs and services machine tools. A summary of its costs (by activity) for 2020 is as follows:

a. Materials and labor for servicing machine tools $1,000,000 b. Rework costs 120,000 c. Expediting costs caused by work delays 70,000 d. Materials-handling costs 65,000 e. Materials-procurement and inspection costs 105,000 f. Preventive maintenance of equipment 80,000 g. Breakdown maintenance of equipment 110,000 1. Classify each cost as value-added, non-value-added, or in the gray area between. 2. For any cost classified in the gray area, assume 96% is value-added and 4% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? 3. Marcovitz is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 60% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 10% and materials-handling costs by 30%; and (c) increasing preventive-maintenance costs by 70% to reduce breakdown-maintenance costs by 50%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly. The Marcovitz Repair Shop repairs and services machine tools. A summary of its costs (by activity) for 2020 is as follows: (Click the icon to view data.) Read the a. Materials and labor for servicing machine tools $1,000,000 b. Rework costs 120,000 c. Expediting costs caused by work delays 70,000 d. Materials-handling costs 65,000 e. Materials-procurement and inspection costs 105,000 f. Preventive maintenance of equipment 80,000 g. Breakdown maintenance of equipment 110,000 1. Classify each cost as value-added, non-value-added, or in the gray area between. 2. For any cost classified in the gray area, assume 96% is value-added and 4% is non-value-added. How much of the total of all seven costs is value-added and how much is non-value-added? 3. Marcovitz is considering the following changes: (a) introducing quality-improvement programs whose net effect will be to reduce rework and expediting costs by 60% and materials and labor costs for servicing machine tools by 5%; (b) working with suppliers to reduce materials-procurement and inspection costs by 10% and materials-handling costs by 30%; and (c) increasing preventive-maintenance costs by 70% to reduce breakdown-maintenance costs by 50%. Calculate the effect of programs (a), (b), and (c) on value-added costs, non-value-added costs, and total costs. Comment briefly. The Marcovitz Repair Shop repairs and services machine tools. A summary of its costs (by activity) for 2020 is as follows: (Click the icon to view data.) Read the

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