Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 12, Problem 14E
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 20x1 are as follows:
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.
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Apply the Concepts, Cost Reporting
Medco Inc., a manufacturing firm, has four activities: purchasing materials, molding, inspecting molds, and grinding imperfect molds. Purchasing
materials and molding are necessary activities; inspection and grinding are unnecessary. SQ provides the value-added quantity for each activity; AQ is
the actual activity output. The following data pertain to the four activities for the year ending (actual price per unit of the activity driver is assumed to
be equal to the standard price):
Activity Activity Driver
Purchasing Purchasing hours
Molding
Inspecting Inspection hours
Molding hours
Grinding. Number of units
Required:
SQ AQ SP
28,000 34,000 $20
42,000 47,600 121
0 8,400 15
0 6,000
6
1. Prepare a cost report for the year 1 ended that shows value-added costs, non-value-added costs, and total costs for each activity by completing
the following table:
Value-and Non-Value-Added Cost Report for the Year 1 Ended
Activity
Value-Added
Costs
Non-Value-Added…
Compute the product margins for the B300 and T500 under the company’s traditional costing system.
2. Compute the product margins for B300 and T500 under the activity-based costing system.
3. Prepare a quantitative comparison of the traditional and activity-based cost assignments.
Following is a list of cost terms described in the chapter as well as a list of brief descriptive settings for each item.Cost terms:a. Opportunity costb. Period costc. Product costd. Direct labor coste. Selling costf. Conversion costg. Prime costh. Direct materials costi. Manufacturing overhead costj. Administrative costSettings:1. Marcus Armstrong, manager of Timmins Optical, estimated that the cost of plastic, wagesof the technician producing the lenses, and overhead totaled $30 per pair of single-visionlenses.2. Linda was having a hard time deciding whether to return to school. She was concernedabout the salary she would have to give up for the next 4 years.3. Randy Harris is the finished goods warehouse manager for a medium-sized manufacturingfirm. He is paid a salary of $90,000 per year. As he studied the financial statementsprepared by the local certified public accounting firm, he wondered how his salary wastreated.4. Jamie Young is in charge of the legal department at company…
Chapter 12 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 12 - What are the two dimensions of the activity-based...Ch. 12 - What is driver analysis? What role does it play in...Ch. 12 - What is activity analysis? Why is this approach...Ch. 12 - What are value-added activities? Value-added...Ch. 12 - What are non-value-added activities?...Ch. 12 - Identify and define four different ways to manage...Ch. 12 - What is a kaizen standard? Describe the kaizen and...Ch. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQ
Ch. 12 - Prob. 11DQCh. 12 - Prob. 12DQCh. 12 - Prob. 13DQCh. 12 - Describe a financial-based responsibility...Ch. 12 - Describe an activity-based responsibility...Ch. 12 - Cicleta Manufacturing has four activities:...Ch. 12 - Assume that at the beginning of 20x2, Cicleta...Ch. 12 - Gordon Company produces custom-made machine parts....Ch. 12 - Foy Company has a welding activity and wants to...Ch. 12 - Uchdorf Manufacturing just completed a study of...Ch. 12 - Harvey Company produces two models of blenders:...Ch. 12 - Prob. 7ECh. 12 - Thayne Company has 30 clerks that work in its...Ch. 12 - Suppose that clerical erroreither Thaynes or the...Ch. 12 - Refer to Exercise 12.8. Suppose that clerical...Ch. 12 - Prob. 11ECh. 12 - For Situations 1 through 6, provide the following...Ch. 12 - Maquina Company produces custom-made machine...Ch. 12 - Sanford, Inc., has developed value-added standards...Ch. 12 - Refer to Exercise 12.14. Suppose that for 20x2,...Ch. 12 - Jane Erickson, manager of an electronics division,...Ch. 12 - For each of the following situations, two...Ch. 12 - Which of the following are examples of...Ch. 12 - A company is spending 70,000 per year for...Ch. 12 - Which of the following is likely to be used to...Ch. 12 - Activity-based management includes both process...Ch. 12 - The activity of moving materials uses four...Ch. 12 - Joseph Fox, controller of Thorpe Company, has been...Ch. 12 - Baker, Inc., supplies wheels for a large bicycle...Ch. 12 - Novo, Inc., wants to develop an activity flexible...Ch. 12 - Prob. 26PCh. 12 - Tom Young, vice president of Dunn Company (a...Ch. 12 - Bienestar, Inc., has two plants that manufacture a...Ch. 12 - Kelly Gray, production manager, was upset with the...Ch. 12 - Douglas Davis, controller for Marston, Inc.,...
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