Question

1. Any example of the property has only monetary value and is not a resource that is physically consumed in the adding-value process?

Answer 1

Please mentioned below the answer

Monetary Value Defined

Monetary value is value in currency that a person, business, or the market places on a resource, product, or service. In fact, most goods and services in our modern economy are priced based on monetary value. Let's look at some examples of resources, goods, and services priced by monetary value:

• Commodities, such as precious metals, agricultural products, oil, gas, and other natural resources
• Tangible property, which is really any physical man-made thing, such as a computer, pencil, and art
• Intangible property, such as patents, literary rights, and publishing rights
• Land
• Certain legal property rights, such as gas, mineral, oil, timber, and water rights
• Services
• Labor, such as wages and salary
• And businesses

In fact, almost everything related to our modern economy and market has a monetary value.

Determining Value

If we assume a perfectly competitive market and no government intervention on price, then we can say that the monetary price of a resource, good, or service is determined by the market according to the law of supply and demand. The law of supply and demand is a pretty simple concept. All things being equal, if demand for something is high but the supply of it is low, then the price will be high. However, if the demand is low and the supply is high, the price will generally be low.

The term "value-added" describes the economic enhancement a company gives its products or services before offering them to customers. Value added helps explain why companies are able to sell their goods or services for more than they cost to produce. Adding value to products and services is very important as it provides consumers with an incentive to make purchases, thus increasing a company's revenue and bottom line.

Value-added could thus apply to instances when a firm takes a product that may be considered homogeneous—with few differences from that of a competitor, if any—and provides potential customers with a feature or add-on that gives it a greater perception of value. Adding a brand name to a generic product can be just as valuable as producing something new or in a way that no one has thought of before.

The value added by an activity should be a positive value. Ideally, the value added by the activity is equal to or greater than the costs incurred during the activity. Value from the customer’s point of view is independent of the cost to produce the product or provide the service. It is based on the customer’s expectations, as identified by the effectiveness indicators for the process.

The value-add assessment of the activity identifies an activity as one of the following:

·          a real-value-add (RVA) activity,

·          a business-value-add (BVA) activity,

·          a non-value-add (NVA) activity,

An activity is classified as RVA if it is effective. In other words, if the activity directly contributes to satisfying the customer’s expectations, it is a RVA activity. Any activity which improves the customer’s perception of the product or service is a RVA activity. Production type activities are RVA activities (e.g., taking customer orders, receiving materials, assembling materials, shipping).

BVA activities are those activities which satisfy business requirements, but add no value from the customer’s viewpoint (e.g., preparing financial reports, maintaining human resources records, and ordering business supplies).

NVA activities are activities which do not enhance the customer’s image of the product or service and do not support the business process. If the activity could be removed from the process, with no effect on the end-product or service, it is an NVA activity. NVA activities, also referred to as waste activities, often indicate deficiencies in the process design. These types of activities include storage, transportation, approval, and inspection type activities.