What if receiving cost is a step-fixed cost with each step, Ask an Expert

Management Studies

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

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

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M9689880

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