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Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
Edition 2ISBN: 978-0077274993 Exercise 18
Activity-Based Reporting: Manufacturing
Leidenheimer Corporation manufactures small airplane propellers. Sales for year 2 totaled $850,000. Information regarding resources for the month follows:
In addition, Leidenheimer spent $25,000 on 50 engineering changes with a cost-driver rate of $500 and $30,000 on eight outside contracts with a cost driver rate of $3,750.
Required
Management has requested that you do the following:
a. Prepare a traditional income statement.
b. Prepare an activity-based income statement.
c. Write a short report explaining why the activity-based income statement provides useful information to managers. Use the information from requirements ( a ) and ( b ) to develop examples for your report.
Leidenheimer Corporation manufactures small airplane propellers. Sales for year 2 totaled $850,000. Information regarding resources for the month follows:
In addition, Leidenheimer spent $25,000 on 50 engineering changes with a cost-driver rate of $500 and $30,000 on eight outside contracts with a cost driver rate of $3,750.
Required
Management has requested that you do the following:
a. Prepare a traditional income statement.
b. Prepare an activity-based income statement.
c. Write a short report explaining why the activity-based income statement provides useful information to managers. Use the information from requirements ( a ) and ( b ) to develop examples for your report.
Explanation
Verified
Verified
(a)Traditional Income Statement
The inc...
Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher
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