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Managerial Accounting

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Cream River Activity Based Mgmt Non-value Warranty Matl Labor

MGRACT-XNEYLV

Cream River Ltd. has recently adopted activity-based management and they are trying to identify non-value-added activities and their related costs. They use a standard costing system to track variances for direct labor and materials. Here are the production details from last period:

Details from Production:

Labor Standard:
Standard labor hours for output achieved 50,000
Standard labor rate \$15.00
Actual Activity for the period: Amount
Warranty Costs \$24,000
Actual labor hours 51,000
Actual labor rate \$16.00
Cost of moving materials \$10,000

What is the cost of non-value-added activities for this period?

A

$40,900

B

$28,900

C

$50,000

D

$50,900