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 |
13,600 |
24,000 |
$24 |
| Assembly |
Labor hours |
99,000 |
120,000 |
17 |
| Expediting |
Orders expedited |
0 |
8,000 |
57 |
| Storing |
Number of units |
0 |
16,000 |
8 |
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 1,700 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 |
12,000 |
12,000 |
$21 |
| Assembly |
Labor hours |
62,500 |
65,500 |
15 |
| Expediting |
Orders expedited |
0 |
2,500 |
50 |
| Storing |
Number of units |
0 |
5,000 |
7 |
Required:
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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".
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Trend Report: Non-Value-Added Costs
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For the Years 2014 and 2015
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