Refer to Exercise 12.14. Suppose that for 20x2, Sanford, Inc., has chosen suppliers that provide higher-quality parts and redesigned its plant layout to reduce material movement. Additionally, Sanford implemented a new setup procedure and provided training for its purchasing agents. As a consequence, less setup time is required and fewer purchasing mistakes are made. At the end of 20x2, the information shown on page 680 is provided.

Required:

1. Prepare a report that compares the non-value-added costs for 20x2 with those of 20x1.

2. What is the role of activity reduction for non-value-added activities? For value-added activities?

3. Comment on the value of a trend report.

Refer 12.14

Transcribed Image Text:

Activity Driver Activities sQ 2,600 5,200 AQ 3,120 6,500 SP Purchasing parts Receiving parts Moving parts Setting up equipment Purchase orders Receiving orders Number of moves Setup hours $300 195 395 840 2,600 117 Activity Driver Activities Purchasing parts Receiving parts Moving parts Setting up equipment SQ 2,600 5,200 AQ 3,640 SP Purchase orders Receiving orders Number of moves Setup hours $300 195 7,800 390 10,400 117