Abbott Business Services (ABS) generated revenue of $653,800 processing accounts payable and payroll transactions for clients. ABS reports the following information about resources in two functions: Resources used Process transactions Administer accounts Resources supplied Process transactions Administer accounts Cost Driver Rate $ 0.008 per transaction $ 525 per account $ 226,000 $ 296,000 Required: a. Compute the cost of unused resource capacity at Abbott Business Services. b. Prepare a traditional income statement. c. Prepare an activity-based income statement. Cost Driver Volume 17,540,000 transactions 446 accounts
Abbott Business Services (ABS) generated revenue of $653,800 processing accounts payable and payroll transactions for clients. ABS reports the following information about resources in two functions: Resources used Process transactions Administer accounts Resources supplied Process transactions Administer accounts Cost Driver Rate $ 0.008 per transaction $ 525 per account $ 226,000 $ 296,000 Required: a. Compute the cost of unused resource capacity at Abbott Business Services. b. Prepare a traditional income statement. c. Prepare an activity-based income statement. Cost Driver Volume 17,540,000 transactions 446 accounts
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Abbott Business Services (ABS) generated revenue of $653,800 processing accounts payable and payroll transactions for clients. ABS
reports the following information about resources in two functions:
Resources used
Process transactions
Administer accounts
Resources supplied
Process transactions
Administer accounts
Required:
a. Compute the cost of unused resource capacity at Abbott Business Services.
b. Prepare a traditional income statement.
c. Prepare an activity-based income statement.
Required A Required B Required C
Complete this question by entering your answers in the tabs below.
Prepare an activity-based income statement.
Revenue
Costs
Cost Driver Rate
$ 0.008 per transaction
$525 per account
$ 226,000
$ 296,000
Volume related - Process transactions
Batch related - Administer accounts
Total costs
Operating profits
Activity-Based Income Statement
Resources
Used
$
Unused
Resource
Capacity
0 $
Cost Driver Volume
17,540,000 transactions
446 accounts
Resources
Supplied
0 $
0
$ 653,800
$
0
653,800
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