Carbon Company provides the following information about resources: Sales revenue
ID: 2554539 • Letter: C
Question
Carbon Company provides the following information about resources:
Sales revenue for Carbon Company is $610,000.
Required:
a. Prepare a traditional income statement.
b. Prepare an activity-based income statement.
Activity Based Income Statement
Unused Resources Capacity Cost Driver Volume Resources used Materials $ 2,100 8,000 pounds Energy 1,260 390 machine-hours Setups 0 83 setups Purchasing 2,300 100 purchase orders Customer service 3,200 90 returns Long-term labor 4,180 340 labor-hours Administrative 4,780 440 labor-hours Resources supplied Materials $ 98,100 Energy 21,540 Setups 23,240 Purchasing 26,300 Customer service 15,800 Long-term labor 29,000 Administrative 30,300Explanation / Answer
Solution:
Given:
Resources Used
Resources Supplied
Unused Resources
(Resources Supplied - Resources Used)
Materials
$
96,000
$
98,100
$ 2,100
Energy
20,280
21,540
1,260
Setups
23,240
23,240
0
Purchasing
24,000
26,300
2,300
Customer service
12,600
15,800
3,200
Long-term labor
24,820
29,000
4,180
Administrative
25,520
30,300
4,780
Total
226,460
244,280
$ 17,820
a. Traditional income statement
Sales Revenue
$610,000
Materials
$ 98,100
Energy
$ 21,540
Setups
$23,240
Purchasing
$ 26,300
Customer service
$ 15,800
Long-term labor
$ 29,000
Administrative
$ 30,300
Total Cost
$ 244,280
Operating Profit
$ 365,720
b. Activity Based Income Statement
Resources Used
Unused Resource Capacity
Resources Supplied
Sales Revenue
$610,000
Costs
Unit
Energy
$ 20,280
$ 1,260
$ 21,540
Materials
$ 96,000
$ 2,100
$ 98,100
Purchasing
$ 24,000
$ 2,300
$ 26,300
Total
$ 140,280
$ 5,660
$ 145,940
Batch
Setups
$ 23,240
0
23,240
Total
$ 23,240
0
$ 23,240
Product and Customer sustaining
Customer service
$ 12,600
$ 3,200
$ 15,800
Total
$ 12,600
$ 3,200
$ 15,800
Capacity Sustaining
Administrative
$ 25,520
$ 4,780
30,300
Long-term labor
$ 24,820
$4,180
$ 29,000
Total
$50,340
$8,960
$59,300
Total Costs
$226,460
$17,820
$ 244,280
$ 244,280
Operating Profit
$ 365,720
Resources Used
Resources Supplied
Unused Resources
(Resources Supplied - Resources Used)
Materials
$
96,000
$
98,100
$ 2,100
Energy
20,280
21,540
1,260
Setups
23,240
23,240
0
Purchasing
24,000
26,300
2,300
Customer service
12,600
15,800
3,200
Long-term labor
24,820
29,000
4,180
Administrative
25,520
30,300
4,780
Total
226,460
244,280
$ 17,820