70.2K

Verified Solution

Link Copied!

Cornerstone Exercise 12.2 (Algorithmic) Trend Reporting for Non-Value-Added Costs

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	15,200	18,000	$27
Assembly	Labor hours	75,000	90,000	19
Expediting	Orders expedited	0	6,000	64
Storing	Number of units	0	12,000	9

Assume that at the beginning of 2015, Cicleta trained the assembly workers in a new approach that had the objective of increasing the efficiency of the assembly process. Cicleta also began moving toward a JIT purchasing and manufacturing system. When JIT is fully implemented, the demand for expediting is expected to be virtually eliminated. It is expected to take two to three years for full implementation. Assume that receiving cost is a step-fixed cost with steps of 1,900 orders. The other three activities employ resources that are acquired as used and needed. At the end of 2015, the following results were reported for the four activities:

Activity	Activity Driver	SQ	AQ	SP
Receiving	Receiving orders	16,800	16,800	$30
Assembly	Labor hours	100,000	103,000	21
Expediting	Orders expedited	0	4,000	71
Storing	Number of units	0	8,000	10

Required:

Hide Prepare a trend report that shows the non-value-added costs for each activity for 2014 and 2015 and the change in costs for the two periods. Enter all your answers as positive amounts. If an amount is zero, enter "0". Cicleta Manufacturing Trend Report: Non-Value-Added Costs For the Years 2014 and 2015 Activity 2014 2015 Change Receiving $ Correct 9 $ Correct 10 $ Correct 11 Assembly Correct 13 Correct 14 Correct 15 Expediting Correct 17 Correct 18 Correct 19 Storing Correct 21 Correct 22 Correct 23 Total $ Correct 25 $ Correct 26 $ Correct 27

Answer & Explanation Solved by verified expert

See Answer