Value- and Non-Value-Added Cost Reporting

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 8,800 30,000 $15 Assembly Labor hours 123,000 150,000 11 Expediting Orders expedited 0 10,000 36 Storing Number of units 0 20,000 5

Required:

1. Prepare a cost report for the year ending 2014 that shows value-added costs, non-value-added costs, and total costs for each activity. If an amount is zero, enter "0".

Cicleta Manufacturing Value and Non-Value-Added Cost Report For the Year Ended 2014 Activity Value-Added Costs Non-Value-Added Costs Total Costs Receiving $ $ $ Assembly Expediting Storing Total $ $ $

2. Explain why expediting products and storing goods are non-value-added activities.