Question

Conlon Enterprises reports the following information about resources. Cost Driver Rate Cost Driver Volume Resources used Setups $ 385 per run 440 runs Clerical 40 per page 2,800 pages typed Resources supplied Setups $ 172,750 Clerical 120,700 Sales revenue totaled $330,000. Required: a. Prepare a traditional income statement. b. Prepare an activity-based income statement.

Answer 1

Answer:

Conlon Enterprises

a. Traditional Income Statement

Sales revenue    $330,000

Setup costs           169,400

Clerical costs         112,000

Operating profit  $48,600

b. Activity-based Income Statement:

                                    Resources    Resources    Unused Resource   Total

                                     Supplied          Used               Capacity        

Sales revenue                                                                                  $330,000

Costs:

Volume-related Setups $172,750      $169,400          $3,350

Batch-related Clerical     120,700         112,000             8,700

Total costs                    $293,450      $281,400        $12,050         281,400

Operating profit                                                                                $48,600

Explanation:

a) Data and Calculations:

                  Cost Driver Rate   Cost Driver Volume   Total Resources used

Resources used

Setups       $ 385 per run        440 runs                     $169,400

Clerical           40 per page      2,800 pages typed    $112,000

Resources supplied

Setups    $ 172,750

Clerical      120,700

Sales revenue totaled $330,000