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5-12 Cost Report; Value and Non-Value Added Costs LO3 Willson Company has developed value-added standards for four activities: purchas- ing parts, assembling parts, administering parts,
5-12 Cost Report; Value and Non-Value Added Costs LO3 Willson Company has developed value-added standards for four activities: purchas- ing parts, assembling parts, administering parts, and inspecting parts. The activities, the activity driver, the standard and actual quantities, and the price standards follow for 2005: Activities Activity Driver SQ AQ SP Purchasing parts Orders 1,500 2,100 $300 Assembling parts Labor hours 180,000 199,500 12 Administering parts Number of parts 18,000 25,800 110 Inspecting parts Inspection hours 75,000 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, non-value-added costs, and actual costs for each activity. 2. Which activities are non-value-added? Explain why. Explain why value-added activities can have non-value-added costs. 0
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