Lemmons Company has developed value-added standards for four activities: purchasing parts, assembling parts, administering parts, and inspecting parts. The activities, the activ¬

ity driver, the standard and actual quantities, and the price standards follow for 2000:

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 costs, nonvalue-added costs, and actual costs for each activity.
2. Which activities are nonvalue-added? Explain why. Also explain why value-added ac¬
tivities can have nonvalue-added costs.

Transcribed Image Text:

Activities Purchasing parts Assembling parts Activity Driver SQ AQ SP Orders 500 700 $300 Labor hours 60,000 66,500 12 Administering parts Inspecting parts Number of parts 6,000 8,600 110 Inspection hours 0 25,000 15