CMA Study Group

In practice, rework may or may not be value adding.. Ie you may rework a part and still lose money on it because you sunk too much incremental cost into it.. However, the idea of reworking a part is that you can salvage the part and thus not need to scrap it and take the cost of the inventory to your PNL. For example, if you have a part worth $100 on your balance sheet that doesnt meet QA standards, but if you rework the part adding 10 of cost, it becomes saleable (for lets say above 110) then the rework is value adding... Alternatively, if you need to add 100 of additional cost for rework, now you ultimately created a part of 200 that can only be sold for 110 so you destroyed value. The concept however, is that your company would only rework a part if it is a value adding proposition.
In reality, this is much more complicated, because companies have the additional constraints of meeting delivery deadlines for customers as well.. So you may destroy value but meet your delivery deadline for a customer and this could add value in the long run.

Hi jelena
according to your question
no rework is non value added activity and any activity that begains with a (re) is non value add activity examples like Reworking , Repairing ...etc

Hi jelena
according to your question
no rework is non value added activity and any activity that begains with a (re) is non value add activity examples like Reworking , Repairing ...etc

Hi jelena
according to your question
no rework is non value added activity and any activity that begains with a (re) is non value add activity examples like Reworking , Repairing ...etc