McCawl Company 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 2009 are as follows:
- Activities activity drivers SQ AQ SP
- Purchasing parts purchase orders 1000 1400 150
- receiving parts receiving orders 2000 3000 100
- moving parts Number of moves 0 1000 200
- setting up equipment setup hours 0 4000 60
The actual price 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 cost for each activity.
2) Which activities are non-value-added? Explain why. Also, explain why value-added activities can have non-value-added costs.