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apters 9-10 Sales revenue Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution Operating profit EZ-SEAT, INC. Income Statement Activity Base Setting up Ergo $2,000,000 600,000 400,000 Standard $5,000,000 1,500,000 500,000 Performing quality control Distribution Saved Total $7,000,000 2,100,000 900,000 EZ-Seat currently uses labor costs to allocate all overhead, but management is considering implementing an activity- system. After interviewing the sales and production staff, management decides to allocate administrative costs on the abor costs but to use the following bases to allocate the remaining costs. 630,000 450,000 330,000 790,000 $1,800,000 Cost Driver Number of production runs Number of inspections Number of units shipped Activity Level Ergo Standard 50 220 1,600 100 220 6,300 Required: a. Complete the income statement using the preceding activity bases. c. Restate the income statement for EZ-Seat using direct labor costs as the only overhead allocation base.

apters 9-10 Sales revenue Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution Operating profit EZ-SEAT, INC. Income Statement Activity Base Setting up Ergo $2,000,000 600,000 400,000 Standard $5,000,000 1,500,000 500,000 Performing quality control Distribution Saved Total $7,000,000 2,100,000 900,000 EZ-Seat currently uses labor costs to allocate all overhead, but management is considering implementing an activity- system. After interviewing the sales and production staff, management decides to allocate administrative costs on the abor costs but to use the following bases to allocate the remaining costs. 630,000 450,000 330,000 790,000 $1,800,000 Cost Driver Number of production runs Number of inspections Number of units shipped Activity Level Ergo Standard 50 220 1,600 100 220 6,300 Required: a. Complete the income statement using the preceding activity bases. c. Restate the income statement for EZ-Seat using direct labor costs as the only overhead allocation base.

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter14: Decentralized Operations
Section: Chapter Questions
Problem 14.3E
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in Course ACCT 3121.2711,ACC apters 9-10 i lucation.com extemap-ir de sim2_com-consexternal browser=0&launchUrl=https": Sales revenue Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution Operating profit Activity Base Setting up * X Performing quality control Distribution 3 EZ-Seat, Inc., manufactures two types of reclining chairs, Standard and Ergo. Ergo provides support for the body through a complex set of sensors and requires great care in manufacturing to avoid damage to the material and frame. Standard is a conventional recliner, uses standard materials, and is simpler to manufacture. EZ-Seat's results for the last fiscal year are shown in the following statement. Ergo $2,000,000 600,000 400, 000 GwMcGraw Hill Education Campus X EZ-SEAT, INC. Income Statement $ d Standard $5,000,000 1,500,000 500,000 EZ-Seat currently uses labor costs to allocate all overhead, but management is considering implementing an activity-based costing system. After interviewing the sales and production staff, management decides to allocate administrative costs on the basis of direct labor costs but to use the following bases to allocate the remaining costs. C Cost Driver Number of production runs Number of inspections Number of units shipped O % 5 J Saved Total $7,000,000 2,100,000 900,000 31 630,000 450,000 330,000 790,000 $1,800,000 < Prev 6 M Question 6- Homework Chapte X Activity Level Ergo Standard 50 100 220 220 6,300 1,600 6 of 18 253A":252F%252Fnewconnect.mheducation.com/252F#/activity/que V po O B 7 O Utica Manufacturing (UM) wa X Next > * 00 Help Sav JC [
Transcribed Image Text:in Course ACCT 3121.2711,ACC apters 9-10 i lucation.com extemap-ir de sim2_com-consexternal browser=0&launchUrl=https": Sales revenue Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution Operating profit Activity Base Setting up * X Performing quality control Distribution 3 EZ-Seat, Inc., manufactures two types of reclining chairs, Standard and Ergo. Ergo provides support for the body through a complex set of sensors and requires great care in manufacturing to avoid damage to the material and frame. Standard is a conventional recliner, uses standard materials, and is simpler to manufacture. EZ-Seat's results for the last fiscal year are shown in the following statement. Ergo $2,000,000 600,000 400, 000 GwMcGraw Hill Education Campus X EZ-SEAT, INC. Income Statement $ d Standard $5,000,000 1,500,000 500,000 EZ-Seat currently uses labor costs to allocate all overhead, but management is considering implementing an activity-based costing system. After interviewing the sales and production staff, management decides to allocate administrative costs on the basis of direct labor costs but to use the following bases to allocate the remaining costs. C Cost Driver Number of production runs Number of inspections Number of units shipped O % 5 J Saved Total $7,000,000 2,100,000 900,000 31 630,000 450,000 330,000 790,000 $1,800,000 < Prev 6 M Question 6- Homework Chapte X Activity Level Ergo Standard 50 100 220 220 6,300 1,600 6 of 18 253A":252F%252Fnewconnect.mheducation.com/252F#/activity/que V po O B 7 O Utica Manufacturing (UM) wa X Next > * 00 Help Sav JC [
in Course ACCT 3121.2711,ACC apters 9-10 i lucation.com extemap-ir de sim2_com-consexternal browser=0&launchUrl=https": Sales revenue Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution Operating profit Activity Base Setting up * X Performing quality control Distribution 3 EZ-Seat, Inc., manufactures two types of reclining chairs, Standard and Ergo. Ergo provides support for the body through a complex set of sensors and requires great care in manufacturing to avoid damage to the material and frame. Standard is a conventional recliner, uses standard materials, and is simpler to manufacture. EZ-Seat's results for the last fiscal year are shown in the following statement. Ergo $2,000,000 600,000 400, 000 GwMcGraw Hill Education Campus X EZ-SEAT, INC. Income Statement $ d Standard $5,000,000 1,500,000 500,000 EZ-Seat currently uses labor costs to allocate all overhead, but management is considering implementing an activity-based costing system. After interviewing the sales and production staff, management decides to allocate administrative costs on the basis of direct labor costs but to use the following bases to allocate the remaining costs. C Cost Driver Number of production runs Number of inspections Number of units shipped O % 5 J Saved Total $7,000,000 2,100,000 900,000 31 630,000 450,000 330,000 790,000 $1,800,000 < Prev 6 M Question 6- Homework Chapte X Activity Level Ergo Standard 50 100 220 220 6,300 1,600 6 of 18 253A":252F%252Fnewconnect.mheducation.com/252F#/activity/que V po O B 7 O Utica Manufacturing (UM) wa X Next > * 00 Help Sav JC [
Transcribed Image Text:in Course ACCT 3121.2711,ACC apters 9-10 i lucation.com extemap-ir de sim2_com-consexternal browser=0&launchUrl=https": Sales revenue Direct materials Direct labor Overhead costs Administration Production setup Quality control Distribution Operating profit Activity Base Setting up * X Performing quality control Distribution 3 EZ-Seat, Inc., manufactures two types of reclining chairs, Standard and Ergo. Ergo provides support for the body through a complex set of sensors and requires great care in manufacturing to avoid damage to the material and frame. Standard is a conventional recliner, uses standard materials, and is simpler to manufacture. EZ-Seat's results for the last fiscal year are shown in the following statement. Ergo $2,000,000 600,000 400, 000 GwMcGraw Hill Education Campus X EZ-SEAT, INC. Income Statement $ d Standard $5,000,000 1,500,000 500,000 EZ-Seat currently uses labor costs to allocate all overhead, but management is considering implementing an activity-based costing system. After interviewing the sales and production staff, management decides to allocate administrative costs on the basis of direct labor costs but to use the following bases to allocate the remaining costs. C Cost Driver Number of production runs Number of inspections Number of units shipped O % 5 J Saved Total $7,000,000 2,100,000 900,000 31 630,000 450,000 330,000 790,000 $1,800,000 < Prev 6 M Question 6- Homework Chapte X Activity Level Ergo Standard 50 100 220 220 6,300 1,600 6 of 18 253A":252F%252Fnewconnect.mheducation.com/252F#/activity/que V po O B 7 O Utica Manufacturing (UM) wa X Next > * 00 Help Sav JC [
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