Sanford, Inc., has developed value-added standards for four activities: purchasing parts, receiving parts, moving parts, and setting up equipment. The activities, the activity drivers, the
- standard and actual quantities, and the price standards for 2013 are as follows:
- Activities Activity Driver SQ AQ SP
- Purchasing parts Purchase orders 2,600 3,640 $300
- Receiving parts Receiving orders 5,200 7,800 195
- Moving parts Number of moves 0 2,600 390
- Setting up equipment Setup hours 0 10,400 117
- 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, non-value-added, and actual costs for each
activity.
2. Which activities are non-value-added? Explain why. Also, explain why value-added activities can have non-value-added costs.