Value- and Non-Value-Added Cost Reporting

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	8,800	21,000	$15
Assembly	Labor hours	87,000	105,000	11
Expediting	Orders expedited	0	7,000	36
Storing	Number of units	0	14,000	5

Required:

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1. Prepare a cost report for the year ending 2014 that shows value-added costs, non-value-added costs, and total costs for each activity. If an amount is zero, enter "0".

Cicleta Manufacturing
Value and Non-Value-Added Cost Report
For the Year Ended 2014
Activity		Value-Added Costs		Non-Value-Added Costs		Total Costs
Receiving		$		$		$
Assembly
Expediting
Storing
Total		$		$		$

2. Explain why expediting products and storing goods are non-value-added activities.

- Select your answer -Both are necessary activitiesBoth are unnecessary activitiesBoth result in a change of state for the productCorrect 1 of Item 2