Esperata 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 2010 (actual price per unit of the activity driver is assumed to be equal to the standard price):

Required:
1. Prepare a cost report for the year ending 2010 that shows value-added costs, nonvalue-
added costs, and total costs for each activity.
2. Explain why expediting products and storing goods are non-value-added activities.
3. What if receiving cost is a step-fixed cost with each step being 1,000 orders whereas assembly cost is a variable cost? What is the implication for reducing the cost of waste for each activity?LO1

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Activity Activity Driver SQ AQ SP Receiving Receiving orders 8,000 12,000 $21 Assembly Labor hours 50,000 60,000 15 Expediting Storing Orders expedited 4,000 50 Number of units 8,000 7