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

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

Step-by-step 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