Willson Company has developed value-added standards for four activities: purchas- ing parts, assembling parts, administering parts, and inspecting parts. The activities, the activity driver, the standard and actual quantities, and the price standards follow for 2005:
| Activities |
Activity Driver |
SQ |
AQ |
SP |
|
Purchasing parts
|
Orders
|
1,500
|
2,100
|
$300
|
|
Assembling parts
|
Labor hours
|
180,000
|
199,500
|
12
|
|
Administering parts
|
Number of parts
|
18,000
|
25,800
|
110
|
|
Inspecting parts
|
Inspection hours
|
0
|
75,000
|
15
|
The actual prices paid per unit of each activity driver were equal to the standard prices.
Required
1. Prepare a cost report that lists the value-added costs, non-value-added costs, and actual costs for each activity.
2. Which activities are non-value-added? Explain why. Explain why value-added activities can have non-value-added costs.