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Rico Company produces custom$-$made machine parts. Rico recently has implemented an activity$-$based management $($ABM$)$ system with the objective of reducing costs. Rico has begun analyzing each activity to determine ways to increase its efficiency. Setting up equipment was among the first group of activities to be carefully studied. The study revealed that setup hours was a good driver for the activity. During the last year, the company incurred fixed setup costs of $$416,250($salaries of $15$ employees$).$ The fixed costs provide a capacity of $27,750$ hours $(1,850$ per employee at practical capacity$).$ The setup activity was viewed as necessary, and the value$-$added standard was set at $1,850$ hours. Actual setup hours used in the most recent period were $26,240.$

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$1.$ Calculate the volume and unused capacity variances for the setup activity. Enter all amounts as positive values.

Volume Variance $fill in the blank $9$ac$562$f$89004$fa$6\_1$

Favorable

Unused Capacity Variance $fill in the blank $9$ac$562$f$89004$fa$6\_3$

Unfavorable

Question Content Area

$2.$ Prepare a report that presents value$-$added, non$-$value$-$added, and actual costs for setup.

blank

Rico Company

Value$-$ and Non$-$Value$-$Added Cost Report

Value$-$Added Non$-$Value$-$Added Actual

Setting up $fill in the blank $063$f$520$d$2$f$82$fd$3\_1$

$fill in the blank $063$f$520$d$2$f$82$fd$3\_2$

$fill in the blank $063$f$520$d$2$f$82$fd$3\_3$

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