Question: Nonvalue-Added Costs Boothe Inc. has the following two activities:
(1) Retesting reworked products, cost: $480,000. The retesting cost of the most efficient competitor is $150,000.
(2) Welding subassemblies, cost: $900,000 (45,000 welding hours). A benchmarking study reveals that the most efficient level for Boothe would use 36,000 welding hours and entail a cost of $720,000.
Required: Determine the nonvalue-added cost of each activity.