Value-added cots are the only costs that an organization should incur. The value-added standard calls for the complete elimination of non-value-added activities: for these activities, the optimal output is zero with zero cost. The value-added standard also calls for the complete elimination of the inefficiency of activities that are necessary but inefficiency carried out. Thus, value-added activities also have an optimal output level. A value-added standard, therefore, identifies the optimal activity output. Identifying the optimal activity output requires activity output measurement.