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 $482,400 (salaries of 16 employees). The fixed costs provide a capacity of 32,160 hours (2,010 per employee at practical capacity). The setup activity was viewed as necessary, and the value-added standard was set at 2,010 hours. Actual setup hours used in the most recent period were 30,420.

1. Calculate the velume and unused capacity variances for the setup activity. Enter all amounts as positive values. 'v'elume 1|ii'ariance S Select your answer FaverableUnfaverableCerrect 2 at Item 1 Unused Capacity 5 Select your answer 1v'an'ance FaverableU nfavera bleCerrect 4 of Item 1 2. Prepare a repert that presents value-added. nen-valueadded, and actual costs for setup. '- l-l