Chapter 12 Exercise 12.15 Trend Report, Non-Value-Added Costs.

Refer to Exercise 12.14. Suppose that for 20x2, Sanford Inc., has chosen suppliers that provide higher-quality parts and redesigned its plant layout to reduce material movement. Additionally, Sanford implemented a new setup procedure and provided training for its purchasing agents. As a consequence, less setup time is required and fewer purchasing mistakes are made. At the end of 2020, the information shown on page 680 is provided.

Activates Activity Driver SQ AQ SP

Purchasing Parts Purchase Orders 2,600 3,120 $300

Receiving Part Receiving Orders 5,200 6,500 195

Moving Parts Number of moves 0 840 395

Setting up equipment Setup Hours 0 2,600 117

Required:

1. Prepare a report that compares the non-value-added costs for 20x2 with those of 20x1
2. What is the role of activity reduction for non-value-added activities? For value-added activities?
3. Comment on the value of a trend report.