Refer to Cornerstone Exercise 12.1. Assume that at the beginning of 2015, Cicleta trained the assembly workers
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1. Prepare a trend report that shows the non-value-added costs for each activity for 2014 and 2015 and the change in costs for the two periods. Discuss the report€™s implications.
2. What if at the end of 2015, the selling price of a competing product is reduced by $27 per unit? Assume that the firm produces and sells 20,000 units of its product and that its product is associated only with the four activities being considered. By virtue of the waste-reduction savings, can the competitor€™s price reduction be matched without reducing the unit profit margin of the product that prevailed at the beginning of the year? If not, how much more waste reduction is needed to achieve this outcome? In this case, what price decision would you recommend?
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