Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Calculation of Value Added and Non-Value Added Costs, Activity Volume and Unused Capacity Variances Maquina Company produces custom-made machine parts. Maquina recently has implemented an
Calculation of Value Added and Non-Value Added Costs, Activity Volume and Unused Capacity Variances Maquina Company produces custom-made machine parts. Maquina recently has implemented an activity-based management (ABM) system with the objective of reducing costs. Maquina has begun analyzing each activity to determine ways to increase its efficiency. Setting up equipment was among the first group of activities to be carefully studied. The study revealed that setup hours was a good driver for the activity. During the last year, the company incurred fixed setup costs of $632,800 (salaries of 14 employees). The fixed costs provide a capacity of 31,640 hours (2,260 per employee at practical capacity). The setup activity was viewed as necessary, and the value-added standard was set at 2,260 hours. Actual setup hours used in the most recent period were 29,590. Required: 1. Calculate the volume and unused capacity variances for the setup activity. Enter all amounts as positive values. Volume Variance Unused Capacity Variance 2. Prepare a report that presents value-added, non-value-added, and actual costs for setup. Maquina Company Value- and Non-Value Added Cost Report Value Added Non-Value Added Actual Setting up $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started