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

(Activity analysis) The 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 floor

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?

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