Question

Value- and Non-Value-Added Cost Reporting

Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and storing goods. Receiving and assembly are necessary activities; expediting and storing goods are unnecessary. The following data pertain to the four activities for the year ending 2014 (actual price per unit of the activity driver is assumed to be equal to the standard price):

Activity	Activity Driver	SQ	AQ	SP
Receiving	Receiving orders	8,800	21,000	$15
Assembly	Labor hours	87,000	105,000	11
Expediting	Orders expedited	0	7,000	36
Storing	Number of units	0	14,000	5

Required:

Hide 1. Prepare a cost report for the year ending 2014 that shows value-added costs, non-value-added costs, and total costs for each activity. If an amount is zero, enter "0". Cicleta Manufacturing Value and Non-Value-Added Cost Report For the Year Ended 2014 Activity Value-Added Costs Non-Value-Added Costs Total Costs Receiving $   $   $   Assembly Expediting Storing Total $   $   $

2. Explain why expediting products and storing goods are non-value-added activities.

- Select your answer -Both are necessary activitiesBoth are unnecessary activitiesBoth result in a change of state for the productCorrect 1 of Item 2

Answer 1

Cicleta Manufacturing
Value and Non-Value-Added Cost Report
For the Year Ended 2014
Activity	Value-Added Costs	Non-Value-Added Costs	Total Costs
Receiving	$               132,000	$                       183,000	$   315,000
Assembly	$               957,000	$                       198,000	$1,155,000
Expediting	$                         -	$                       252,000	$   252,000
Storing	$                         -	$                         70,000	$     70,000
Total	$            1,089,000	$                       703,000	$1,792,000
Both are unnecessary activities

Cicleta Manufacturing
Value and Non-Value-Added Cost Report
For the Year Ended 2014
Activity	Value-Added Costs	Non-Value-Added Costs	Total Costs
Receiving	=8800*15	=(21000-8800)*15	=D7+E7
Assembly	=87000*11	=(105000-87000)*11	=D8+E8
Expediting	0	=7000*36	=D9+E9
Storing	0	=14000*5	=D10+E10
Total	=SUM(D7:D10)	=SUM(E7:E10)	=SUM(F7:F10)