Cornerstone Exercise 12.2 (Algorithmic) Trend Reporting for Non-Value-Added Costs

Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and storing goods. Receiving and assembly are necessary activities; expediting and storing goods are unnecessary. The following data pertain to the four activities for the year ending 2014 (actual price per unit of the activity driver is assumed to be equal to the standard price):

Activity	Activity Driver	SQ	AQ	SP
Receiving	Receiving orders	10,400	21,000	$18
Assembly	Labor hours	87,000	105,000	13
Expediting	Orders expedited	0	7,000	43
Storing	Number of units	0	14,000	6

Assume that at the beginning of 2015, Cicleta trained the assembly workers in a new approach that had the objective of increasing the efficiency of the assembly process. Cicleta also began moving toward a JIT purchasing and manufacturing system. When JIT is fully implemented, the demand for expediting is expected to be virtually eliminated. It is expected to take two to three years for full implementation. Assume that receiving cost is a step-fixed cost with steps of 1,300 orders. The other three activities employ resources that are acquired as used and needed. At the end of 2015, the following results were reported for the four activities:

Activity	Activity Driver	SQ	AQ	SP
Receiving	Receiving orders	13,600	13,600	$24
Assembly	Labor hours	50,000	53,000	17
Expediting	Orders expedited	0	2,000	57
Storing	Number of units	0	4,000	8

Required:

Required:

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Prepare a trend report that shows the non-value-added costs for each activity for 2014 and 2015 and the change in costs for the two periods. Enter all your answers as positive amounts. If an amount is zero, enter "0".

Cicleta Manufacturing
Trend Report: Non-Value-Added Costs
For the Years 2014 and 2015
Activity		2014		2015		Change
Receiving		$		$		$
Assembly
Expediting
Storing
Total		$		$		$