Lemmons Company has developed value-added standards for four activities: pur- chasing parts, assembling parts, administering parts, and inspecting parts. The ac- tivities, the activity driver, the standard and actual quantities, and the price stan- dards follow for 2000:

Activities Activity Driver SQ AQ SP Purchasing parts Orders 500 700 $300 Assembling parts Labor hours 60,000 66,500 12 Administering parts Number of parts 6,000 8,600 110 Inspecting parts Inspection hours 0 25,000 15 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. Explain why value-added activities can have nonvalue-added costs. lop4