Fundamentals of Cost Accounting
5th Edition
ISBN: 9781259565403
Author: William N. Lanen Professor, Shannon Anderson Associate Professor, Michael W Maher
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 52P
a.
To determine
Prepare a traditional income statement.
b.
To determine
Prepare an activity-based income statement.
c.
To determine
Prepare a short report to Company Cdescribing how activity-based income statement.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The controller at Wesson Company's manufacturing plant has provided you with the following information for the first quarter's
operations:
Direct materials
Fixed manufacturing overhead costs
Sales price
Variable manufacturing overhead
Direct labor
Fixed marketing and administrative costs
Units produced and sold during the quarter
Variable marketing and administrative costs
Required:
a. Prepare a gross margin income statement.
b. Prepare a contribution margin income statement.
Complete this question by entering your answers
Required A Required B
Prepare a contribution margin income statement.
Contribution Margin Income Statement
The graphs below represent cost behavior patterns that might occur in a company’s cost structure. The vertical axis represents total cost, and the horizontal axis represents activity output
Required:For each of the following situations, choose the graph from the group a–1 that best illustrates the cost pattern involved. Also, for each situation, identify the driver that measures activity output.1. The cost of power when a fixed fee of $500 per month is charged plus an additional charge of $0.12 per kilowatt-hour used.2. Commissions paid to sales representatives. Commissions are paid at the rate of 5 percent of sales made up to total annual sales of $500,000, and 7 percent of sales above $500,000.3. A part purchased from an outside supplier costs $12 per part for the first 3,000 parts and $10 per part for all parts purchased in excess of 3,000 units.4. The cost of surgical gloves, which are purchased in increments of 100 units (gloves come in boxes of 100 pairs).5. The cost of tuition…
Accounting records for The Ralston Company show the following for the most recent fiscal year.
Units produced and sold
Total revenues and costs
Sales revenue
Direct materials costs
Direct labor costs
Variable manufacturing overhead
Fixed manufacturing overhead
Variable marketing and administrative costs
Fixed marketing and administrative costs
Required:
a. Prepare a gross margin Income statement.
b. Prepare a contribution margin Income statement.
Required A Required B
Complete this question by entering your answers in the tabs below.
Prepare a gross margin income statement.
Gross Margin Income Statement
59,500
Chapter 10 Solutions
Fundamentals of Cost Accounting
Ch. 10 - How are activity-based costing and activity-based...Ch. 10 - Can activity-based management be implemented...Ch. 10 - Prob. 3RQCh. 10 - What are some ways in which customers affect a...Ch. 10 - How is computing the cost of customers the same as...Ch. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Under what conditions should the cost of excess...Ch. 10 - In what ways does quality affect cost?Ch. 10 - What are the four categories in a cost of quality...
Ch. 10 - Prob. 11CADQCh. 10 - Prob. 12CADQCh. 10 - Consider a library that spends 25,000 to move most...Ch. 10 - Prob. 14CADQCh. 10 - Prob. 15CADQCh. 10 - You can get the cost of customers by first...Ch. 10 - Prob. 17CADQCh. 10 - Prob. 18CADQCh. 10 - Prob. 19CADQCh. 10 - Prob. 20CADQCh. 10 - Many if not most schools in the United States have...Ch. 10 - Prob. 22CADQCh. 10 - Prob. 23CADQCh. 10 - Prob. 24ECh. 10 - Prob. 25ECh. 10 - Cost Hierarchy for a Not-for-Profit Below are...Ch. 10 - Prob. 27ECh. 10 - Driver Identification Below are various activities...Ch. 10 - Activity-Based Costing of Customers Marvins...Ch. 10 - Activity-Based Costing of Customers Rock Solid...Ch. 10 - Activity-Based Costing of Customers Refer to the...Ch. 10 - Activity-Based Costing of Customers: Ethical...Ch. 10 - Prob. 33ECh. 10 - Activity-Based Costing of Suppliers Hult Games...Ch. 10 - Prob. 35ECh. 10 - Activity-Based Costing of Suppliers Kinnear...Ch. 10 - Activity-Based Costing of Suppliers Refer to the...Ch. 10 - Resources Used versus Resources Supplied Tri-State...Ch. 10 - Prob. 39ECh. 10 - Resources Used versus Resources Supplied Conlon...Ch. 10 - Prob. 41ECh. 10 - Prob. 42ECh. 10 - Assigning Cost of Capacity Mimis Fixtures...Ch. 10 - Assigning Cost of Capacity Curts Casting...Ch. 10 - Prob. 45ECh. 10 - Costs of Quality The following represents the...Ch. 10 - Trading-Off Costs of Quality Using the costs...Ch. 10 - Costs of Quality Nuke-It-Now manufactures...Ch. 10 - Prob. 49ECh. 10 - Cost of Quality: Environmental Issues Many...Ch. 10 - Prob. 51ECh. 10 - Prob. 52PCh. 10 - Activity-Based Reporting: Service Organization...Ch. 10 - Prob. 54PCh. 10 - Customer Profitability Carmel Company has a...Ch. 10 - Activity-Based Costing of Suppliers JFI Foods...Ch. 10 - Activity-Based Costing of Suppliers Consider the...Ch. 10 - Activity-Based Reporting: Manufacturing...Ch. 10 - Assigning Capacity Costs Cathy and Toms Specialty...Ch. 10 - Prob. 60PCh. 10 - Prob. 61PCh. 10 - Assigning Capacity Costs Mercia Chocolates...Ch. 10 - Prob. 63PCh. 10 - Prob. 64PCh. 10 - Prob. 65P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Cost of quality and value-added/non-value-added reports for a service company A. Using the information in Exercise 17, identify the cost of quality classification for each activity and whether the activity is value-added or non-value-added. B. Prepare a cost of quality report. Assume that sales are 3,000,000. (Round percentages to one decimal place.) C. Prepare a value-added/non-value-added analysis. D. Interpret the information in (B) and (C).arrow_forwardObjective: Consider that you are an analyst at Regeneron Pharmaceuticals. You need to decide how to allocate administrative overhead costs to Regeneron's main commercial products (Eylea, Dupixent, Kevzara and Praluent). Determine how to appropriately allocate the costs in the table below to each of the commercial products using an allocation methodology of your choice. Department2019 Annual Operating ExpenseTime spent supporting Commercial productsCommercial$200MM100%IT$100MM25%Facilities$150MM0%Finance$25MM20%Human Resources$75MM10% Use the supporting document Net Product Sales of REGN Products to facilitate your analysis. Provide a written summary of how you allocated the overhead costs to each product in an outline of no more than one page. As a starting point, it's recommended that you revisit the material we covered in Chapter 12. Guidance on calculations:Start off with Net Product Sales of REGN Products. Your objective pertains to 2019 expenses, so you should be reviewing 2019…arrow_forwardAdvanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages and salaries $ 300,000 100,000 $ 400,000 Other overhead costs Total overhead costs Total Activity for Activity Cost Pool Supporting direct labor Order processing Customer support Activity Measure Number of direct labor-hours the Year 20,000 DLHS Number of customer orders Number of customers 400 orders 200 customers Other This is an organization- sustaining activity Not applicable Distribution of Resource Consumption Across Activities Supporting Direct Labor Order Customer Processing Support 20% Other Total Wages and salaries Other overhead costs 40% 30% 10% 100% 30% 10% 20% 40% 100% During the year, Advanced Products completed one order for a new customer, Shenzhen Enterprises. This customer did not order any other products during the year. Data concerning that order follow: Data Concerning the Shenzhen Enterprises Order Units ordered 10 units 2 DLHS per unit $300…arrow_forward
- Assume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation. Marley's ManufacturingIncome StatementMonth Ending August 31, 2018 Dept. A Dept. B Sales $21,000 $52,000 Cost of goods sold 9,870 27,040 Gross profit $11,130 $24,960 Expenses: Utility expenses $840 $3,120 Wages expense 5,040 10,920 Costs allocated from corporate 2,100 14,560 Total expenses $7,980 $28,600 Operating income/(loss) in dollars $fill in the blank 1 $fill in the blank 2 Operating income/(loss) in percentage fill in the blank 3 % fill in the blank 4 % Department B had…arrow_forwardAssume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation. Marley's ManufacturingIncome StatementMonth Ending August 31, 2018 Dept. A Dept. B Sales $23,000 $51,000 Cost of goods sold 11,040 26,520 Gross profit $11,960 $24,480 Expenses: Utility expenses $920 $2,550 Wages expense 5,980 10,710 Costs allocated from corporate 2,300 14,280 Total expenses $9,200 $27,540 Operating income/(loss) in dollars $fill in the blank 1 $fill in the blank 2 Operating income/(loss) in percentage fill in the blank 3 % fill in the blank 4 %arrow_forwardThe following is a financial information from MayPagAsaPa Company: Additional information:The company purchase office supplies from big manufacturers and distributes among different segments. Cost of goods sold and shipping expenses are both variable. 1.Prepare a new contribution format segmented income statement. 2.Analyze your requirement #1. What points that might help to improve the company’s performance would you bring to management’s attention? 3.Compare your output with Requirement 1 with the information above. List the items you think that is an error/disadvantage/weakness of the given data.arrow_forward
- Instruction: Read each problem carefully ana proviue h n Prob Problem 1. Classify each of the following costs of Bug Company in two ways: (a) as variable (V) fixed costs (F); (b) as inventoriable costs (I) or period costs (P): Example: Direct labor 1. Salary of company 2. Fire insurance on direct materials controller 3. Property taxes on finished goods held for sale 4. Direct materials used tico of 5. Factory.renty p 6. Sales Commissions R 7. Overtime premium of machine operators 8. Straight-line depreciation of Factory equipment 9. Straight-line depreciation of trucks used for delivery R. of sales to customers 10. Salary of factory supervisor 16arrow_forwardAssume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation. Marley's Manufacturing Income Statement Month Ending August 31, 2018 Dept. A Dept. B Sales $22,000 $52,000 Cost of goods sold 10,780 27,040 Gross profit $11,220 $24,960 Expenses: Utility expenses $880 $3,640 Wages expense 5,280 10,920 Costs allocated from corporate 1,980 14,560 Total expenses $8,140 $29,120 Operating income/(loss) in dollars $ $ Operating income/(loss) in percentage % Department B had an operating loss. Department A had an operating loss. Department B has a higher wage percent of sales. Department A receives a higher percent…arrow_forwardAssume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation. Marley's Manufacturing Income Statement Month Ending August 31, 2018 Dept. A Dept. B Sales $22,000 $50,000 Cost of goods sold 10,340 26,000 Gross profit $11,660 $24,000 Expenses: Utility expenses $1,320 $2,500 Wages expense 5,280 10,000 Costs allocated from corporate 2,200 14,000 Total expenses $8,800 $26,500 Operating income/(loss) in dollars %$4 % Operating income/(loss) in percentage %24arrow_forward
- 13. 14. Classify each of the following costs as either Product or Period by placing an "X" in the corresponding column (choose one per cost item). Costs Electricity cost for the manufacturing plant. Sales employees' salaries Delivery costs Direct materials Product Period Management Accountants use their knowledge and expertise to develop cost management information in support of organizational decision making to achieve company goals and objectives. a. List the four functions of management:arrow_forwardThe graphs below represent cost behavior patterns that might occur in acompany's cost structure. The vertical axis represents total cost, and thehorizontal axis represents activity output. Required:For each of the following situations, choose the graph from the group a-1 that best illustrates the cost pattern involved. Also, for each situation,identify the driver that measures activity output. 1. The cost of power when a fixed fee of $500 per month is chargedplus an additional charge of $0.12 per kilowatt-hour used2. Commissions paid to sales representatives. Commissions arepaid at the rate of 5 percent of sales made up to total annual salesof $500,000, and 7 percent of sales above $500,000.3. A part purchased from an outside supplier costs $12 per part for the first 3,000 parts and $10 per part for all parts purchased inexcess of 3,000 units.4. The cost of surgical gloves, which are purchased in incrementsof 100 units (gloves come in boxes of 100 pairs).5. The cost of tuition at a…arrow_forwardAs a new accountant of the company, you are provided with the following information related to KOKO: Product Annual production and sales unit Direct material cost per unit Direct labour cost per unit Machine hours per unit Selling price per unit Koko 5,500 RM50 RM35 3 hours RM150 The company is considering of changing the traditional method to the Activity Based Costing (ABC) method. In order to adopt ABC method the following information is required: Activity Cost Cost Driver Pool Expected overhead Expected use of drivers per product Other products 3,500 costs Коко (RM) No of purchase orders Machine hours Maintenance Maintenance hours Number of inspections Total Purchasing 4,000 37,500 Machining 16,500 8,000 1,500 147,000 43,000 3,500 Quality control 1900 1600 17,500 245,000 Required: a. If the company decided to use the Activity Based Costing (ABC) method, determine the cost per unit of KOKO. Based on your answer in (a), advise whether the company should change to ABC method. Support…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Inspection and Quality control in Manufacturing. What is quality inspection?; Author: Educationleaves;https://www.youtube.com/watch?v=Ey4MqC7Kp7g;License: Standard youtube license