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FINANCIAL ACCOUNTING
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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**Cost Report, Value-Added and Non-Value-Added Costs** 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 20x1 are as follows: | **Activities** | **Activity Driver** | **SQ** | **AQ** | **SP** | |-------------------------|---------------------|--------|--------|--------| | Purchasing parts | Purchase orders | 3,800 | 4,870 | $370 | | Receiving parts | Receiving orders | 7,600 | 9,700 | $200 | | Moving parts | Number of moves | 0 | 2,800 | $170 | | Setting up equipment | Setup hours | 0 | 6,600 | $310 | 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. If an amount is zero, enter "0". **Sanford, Inc.** **Value- and Non-Value-Added Cost Report** **For the Year Ended December 31, 20x1** | **Activities** | **Value-Added** | **Non-Value-Added** | **Actual** | |-------------------------|-----------------|---------------------|------------| | Purchasing parts | | | | | Receiving parts | | | | | Moving parts | | | | | Setting up equipment | | | | | **Total** | | | | 2. Which activities are non-value-added? **Explanation:** - **Graphs/Diagrams**: The table in the image represents various activities related to inventory and setup processes at Sanford, Inc. It details the standard quantity (SQ), actual quantity (AQ), and standard price (SP) for each activity. The cost report form is meant to assess which activities add value or incur unnecessary costs (non-value-added). - **Activities and Drivers**: Four key activities are analyzed here: - **Purchasing parts** requires purchase orders. - **Receiving parts** involves handling
Transcribed Image Text:**Cost Report, Value-Added and Non-Value-Added Costs** 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 20x1 are as follows: | **Activities** | **Activity Driver** | **SQ** | **AQ** | **SP** | |-------------------------|---------------------|--------|--------|--------| | Purchasing parts | Purchase orders | 3,800 | 4,870 | $370 | | Receiving parts | Receiving orders | 7,600 | 9,700 | $200 | | Moving parts | Number of moves | 0 | 2,800 | $170 | | Setting up equipment | Setup hours | 0 | 6,600 | $310 | 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. If an amount is zero, enter "0". **Sanford, Inc.** **Value- and Non-Value-Added Cost Report** **For the Year Ended December 31, 20x1** | **Activities** | **Value-Added** | **Non-Value-Added** | **Actual** | |-------------------------|-----------------|---------------------|------------| | Purchasing parts | | | | | Receiving parts | | | | | Moving parts | | | | | Setting up equipment | | | | | **Total** | | | | 2. Which activities are non-value-added? **Explanation:** - **Graphs/Diagrams**: The table in the image represents various activities related to inventory and setup processes at Sanford, Inc. It details the standard quantity (SQ), actual quantity (AQ), and standard price (SP) for each activity. The cost report form is meant to assess which activities add value or incur unnecessary costs (non-value-added). - **Activities and Drivers**: Four key activities are analyzed here: - **Purchasing parts** requires purchase orders. - **Receiving parts** involves handling
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