Problem:

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 2012 (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          12000     18000       $21

Assembly           labor hours                75000    90000         15

Expediting       orders expedited              0         6000          50

Storing              number of units            0        12000          7

Required:

Question 1) prepare a cost report for the year ending 2012 that shows value-added costs, non-value-added costs, and total costs for each activity.

Question 2) explain why expediting products and storing goods are non-value added activities.

Question 3) what if receiving cost is a step-fixed cost with each step being 1,500 orders whereas assembly cost is a variable cost? what is the implication for reducing the cost of waste for each activity?

Solve the given numerical problem and illustrate step by step calculation.