E4-1 Classifying Activities According to Level, Determining Value-Added or Non-v
ID: 2421644 • Letter: E
Question
E4-1 Classifying Activities According to Level, Determining Value-Added or Non-value-Added [LO 4-2, 4-3, 4-8]
Lindwood Company manufactures coffee cups in several different sizes and has identified the following activities in its manufacturing process: Required: 1., 2., & 3. Classify each activity listed as facility, product, batch, or unit level, identify a cost driver for each activity listed and indicate whether each activity is value-added or non-value-added.
Activity
Level
Cost Driver
Value-Added/ Non- Value-Added
Storing inventory
Creating molds
Pouring plaster
Firing pots in kiln
Sanding and finishing
Painting
Performing quality control
Ordering materials
Delivering an order to a large customer such as Home Depot
Insuring the manufacturing facility
Reconfiguring machinery between batches
Activity
Level
Cost Driver
Value-Added/ Non- Value-Added
Storing inventory
Creating molds
Pouring plaster
Firing pots in kiln
Sanding and finishing
Painting
Performing quality control
Ordering materials
Delivering an order to a large customer such as Home Depot
Insuring the manufacturing facility
Reconfiguring machinery between batches
Explanation / Answer
Storing inventory-----Facility----Sq.Footage----Non- Value-Added
Creating molds----Unit, product, Batch-----Molds Used---value-Added
Pouring plaster-----Unit, Batch--------Units--------Value-Added
Firing pots in kiln----Unit, Batch-----Batches fired-----Value-Added
Sanding and finishing----Unit-----Units, Labour hours------Value-Added
Painting-------Unit-------Units, Labour hours-------Value-Added
Performing quality control-----Batch,Product-----Inspections------Non- Value-Added
Ordering materials-------Facility,Batch,Product-----Orders----Non- Value-Added
Delivering an order to a large customer such as Home Depot------Batch - - - - - - - - Deliveries-------Value-Added
Insuring the manufacturing facility-------Facility-----Sq.Footage------Value-Added
Reconfiguring machinery betweenbatches--------Batch---------Batches - - - - - - - Non- Value-Added
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