63.Value-added and non-value-added activitiesExplain the distinction between value-added and non-value added activities. Provide an example of each. 64.Target costingRay-Dee, Inc. is...

63.Value-added and non-value-added activities


Explain the distinction between value-added and non-value added activities. Provide an example of each.

64.Target costing


Ray-Dee, Inc. is considering the introduction of a new deluxe quality stereo tabletop radio. This radio will produce exceptional sound quality through new speaker technology. Market research indicates that customers would be willing to pay $400 for a radio of the quality considered. Ray-Dee requires a 30% return on sales for all its products.


Required: Compute Ray-Dee's target cost for the radio under consideration.

65.Pool-Glow, Inc. has developed a new light for lighting swimming pools. After doing market research, it has determined that customers would be willing to pay $140 for this light. Pool-Glow seeks to earn 25% profit on the light. At present, Pool-Glow makes an old style light for $101.25, which sells for $130.


(1.) What must the target cost be in order to earn the 25% profit that the company demands?
(2.) If Pool-Glow can adjust its costs to the target cost, the company estimates that it can sell 50,000 lights. What would Pool-Glow's profit be at this point?
(3.) How many of the old style lights would have to be sold to reach the same profit?