A Plant Produces 85 Different Electronic Products

A plant produces 85 different electronic products.Each product requires an average of seven components that are purchased externally.By redesigning the products, it is possible to produce the 85 products so that they all have four components in common.This will reduce the demand for purchasing, receiving, and paying bills.Estimated savings from the reduced demand are $1,400,000 per year.Calculate the nonvalue-added cost of purchasing, receiving, and paying bills.

A) $1,400,000
B) $1,000,000
C) $900,000
D) $600,000

Correct Answer:

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