Exercise 12.14 Cost Report, Value-Added and Non-Value-Added Costs Sanford, Ic., has developed value-added standards for four activities: purchasing parts, receiv- ing parts, moving parts, and setting up equipment. The activities, the activity drivers, the standard and actual quantities, and the price standards for 20xl are as follows: so Activities Activity Driver AQ SP 2,600 Purchasing parts Receiving parts Moving parts Setting up equipment 3,640 7,800 2,600 Purchase orders S300 195 Receiving orders Number of moves 5,200 390 Setup hours 10,400 117 The actual prices paid per unit of each activity driver were equal to the standard prices. Required: 1. Prepare a cost report that lists the value-added, non-value-added, and actual costs for each activity. 2. Which activities are non-value-added? Explain why. Also, explain why value-added activ- ities can have non-value-added costs.

Exercise 12.14 Cost Report, Value-Added and Non-Value-Added Costs Sanford, Ic., has developed value-added standards for four activities: purchasing parts, receiv- ing parts, moving parts, and setting up equipment. The activities, the activity drivers, the standard and actual quantities, and the price standards for 20xl are as follows: so Activities Activity Driver AQ SP 2,600 Purchasing parts Receiving parts Moving parts Setting up equipment 3,640 7,800 2,600 Purchase orders S300 195 Receiving orders Number of moves 5,200 390 Setup hours 10,400 117 The actual prices paid per unit of each activity driver were equal to the standard prices. Required: 1. Prepare a cost report that lists the value-added, non-value-added, and actual costs for each activity. 2. Which activities are non-value-added? Explain why. Also, explain why value-added activ- ities can have non-value-added costs.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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:14 es Howell Corporation's activity-based costing system has three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment depreciation and indirect labor, are allocated to the cost pools in proportion to the activity cost pools' consumption of resources. Equipment depreciation (total) Indirect labor (total) Distribution of Resource Consumption Across Activity Cost Pools Setting Up 0.30 0.10 Equipment depreciation Indirect labor Product S4 Product CO Total Costs in the Machining cost pool are assigned to products based on machine-hours (MHS) and costs in the Setting Up cost pool are assigned to products based on the number of batches. Costs in the Other cost pool are not assigned to products. Sales (total) Direct materials (total) Direct labor (total) $ 33,800 $ 7,950 MHS 8,900 6,300 15,200 Required A Machining 0.30 0.30 Additional data concerning the company's products appears below: Product S4 Product Co $ 88,100 $ 75,500 $…
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Question Two Pass-Well Company Limited produces a product that passes through two processes, Process 1 and Process 2. Details of activities for the month of December, 2020 is as follows; Process 1 @GH₵200.00 200hrs 3,500units GH₵20 per unit Process 2 GH₵25,000.00 600hrs 3,150units GH₵40 per unit a. You are required to prepare the relevant accounts b. You are required to prepare the relevant Accounts With practical example, differentiate between cost assignment and cost apportionment; product cost and period costs; direct Material introduced (4,000 units) Material added Labour Costs (@GH₵400 per hour) Output in units Scrap value of normal loss Note; i. Overhead is absorbed at 80% of labour costs. ii. Normal loss is estimated at 10% for both process. iii. No opening and closing stocks cost and indirect cost
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