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 20x1 (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	12,000	18,000	$21
Assembly	Labor hours	75,000	90,000	15
Expediting	Orders expedited	0	6,000	50
Storing	Number of units	0	12,000	7

Required:

1. Prepare a cost report for the year ending 20x1 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 20X1
Activity	Value-Added Costs	Non-Value-Added Costs	Total Costs
Receiving	$	$	$
Assembly
Expediting
Storing
Total	$	$	$

Answer 1

	Value added costs	non value added	total
Receiving	(12,000*21) = 252,000	(18,000-12,000)*21 = 126,000	378,000
Assembly	(75,000*15) = 1,125,000	(90,000-75,000*15) = 225,000	1,350,000
Expediting	0	(6,000*50) = 300,000	300,000
Storing	0	(12,000*7) = 84,000	84,000
Total	1,377,000	735,000	2,112,000