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Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402 Exercise 25
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 2012 (actual price per unit of the activity driver is assumed to be equal to the standard price):
Required:
1. Prepare a cost report for the year ending 2012 that shows value-added costs, non-valueadded costs, and total costs for each activity.
2. Explain why expediting products and storing goods are non-value-added activities.
3. What if receiving cost is a step-fixed cost with each step being 1,500 orders whereas assembly cost is a variable cost? What is the implication for reducing the cost of waste for each activity?
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 2012 (actual price per unit of the activity driver is assumed to be equal to the standard price):
Required:
1. Prepare a cost report for the year ending 2012 that shows value-added costs, non-valueadded costs, and total costs for each activity.
2. Explain why expediting products and storing goods are non-value-added activities.
3. What if receiving cost is a step-fixed cost with each step being 1,500 orders whereas assembly cost is a variable cost? What is the implication for reducing the cost of waste for each activity?
Explanation
Verified
Verified
1.Value added costs:
Value added costs ...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
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