Question

Calculation of Value-Added and Non-Value-Added Costs, Activity Volume and Unused Capacity Variances

Maquina Company produces custom-made machine parts. Maquina recently has implemented an activity-based management (ABM) system with the objective of reducing costs. Maquina has begun analyzing each activity to determine ways to increase its efficiency. Setting up equipment was among the first group of activities to be carefully studied. The study revealed that setup hours was a good driver for the activity. During the last year, the company incurred fixed setup costs of $524,160 (salaries of 12 employees). The fixed costs provide a capacity of 24,960 hours (2,080 per employee at practical capacity). The setup activity was viewed as necessary, and the value-added standard was set at 2,080 hours. Actual setup hours used in the most recent period were 23,190.

Required:

1. Calculate the volume and unused capacity variances for the setup activity. Enter all amounts as positive values.

Volume Variance	$
Unused Capacity Variance	$

2. Prepare a report that presents value-added, non-value-added, and actual costs for setup.

Maquina Company
Value- and Non-Value-Added Cost Report
	Value-Added	Non-Value-Added	Actual
Setting up	$	$	$

Answer 1

AnaNer Gaveo daka Fixed atop cost 584160 value added ser das4 2080 !) Cem on 4 volume and uneted Capaety Cal clate fes aetty nate i 524160ノ2960 ator ln Note volume variante Spx Sa Spx A 21X 2080-21 x 2496。

rasiane 524160-y8699 volume vorianee unused c Non - hlatiny Note vabee adted spx value added ジ24 x2380 93680 value adses 21 X C24960-3080 е 480460

Ackual Case 43680 +480 52416 value nen value added-adhed Cafp valisn addeden-Valise added Aca Settngupl 닛3680 ち3460