please answer Q 12.13

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 costs of $504,000 (salaries of 14 employees). The fixed costs provide a capacity of 28,000 hours (2,00 per employee at practical a capacity). The setup activity was viewed as necessary, and the value-added standard was set at 2,000 hours- Actual setup hours used in the most recent period were 26, 200. Calculate the volume and unused capacity variances for the setup activity. Explain What each variance means. Prepare a report that presents value-added, non-value-added, and actual costs for setup. Explain why highlighting the non-value-added costs is important Assume management is able to reduce the demand for the setup activity so that the actual hours needed drop from 26, 200 to 4,000. What actions should now be taken regarding activity capacity management? Another activity studied was inspection of supplier materials and components. Explain why inspecting incoming goods should be viewed as a non-value-added activity. In providing your explanation, consider the following counterargument: "Inspecting incoming goods adds value because it reduces the demand for other unnecessary activities such as rework, reordering, and warranty work." Sanford, Inc., has developed value-added standards for four activities: purchasing parts, receiving parts, moving parts, and setting up equipment. The activities, the activity drivers, the standard and actual quantities, and the price standards for 2015 are as follows: The actual prices paid per unit of each activity driver were equal to the standard prices. Required: Prepare a cost report that lists the value-added, non-value-added, and actual costs for each activity. Which activities are non-value-added? Explain why. Also, explain why value-added activities can have non-value-added costs