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Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787 Exercise 3
VALUE- AND NON-VALUE-ADDED COST REPORTING
Esperata 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 2010 (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 2010 that shows value-added costs, nonvalue- added 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 1,000 orders whereas assembly cost is a variable cost? What is the implication for reducing the cost of waste for each activity?
Esperata 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 2010 (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 2010 that shows value-added costs, nonvalue- added 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 1,000 orders whereas assembly cost is a variable cost? What is the implication for reducing the cost of waste for each activity?
Explanation
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1.
Cost report for the year ending 2010...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
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