Please do not give image format Normandy Office Products (NOP) makes two types of office desks, Manager and Executive. The Executive model is adjustable usingelectric motors and is made with upgraded materials. The manufacturing process for the Executive model is more complex than thatfor the Manager model, requiring more frequent inspections and shorter production runs. The Manager model is a basic desk, usinggood, but easy to work with, materials, and is simpler to manufacture. NOP's results for the last fiscal year are shown in the followingstatement.Sales revenueDirect materialsDirect laborOverhead costs.AdministrationMachine setupInspectionPacking and shipping.Operating profitActivityMachine setupInspectionPacking and shippingRequired ANOP currently uses labor costs to allocate all overhead, but management is considering implementing an activity-based costingsystem. After interviewing the sales and production staff, management decides to allocate administrative costs on the basis of directlabor costs but to use the following bases to allocate the remaining costs:Required CNORMANDY OFFICE PRODUCTSAccountSales revenueDirect materialsDirect laborOverhead costs:Income StatementAdministrationMachine setupInspectionPacking and shippingManagerExecutiveTotal$ 1,036,800 $ 1,150,200 $ 2,187,000Total overhead costsOperating profit (loss)183,600129,600Required:a. Prepare the product line income statement using the proposed activity bases.c. Restate the product line income statement for Normandy Office Products using direct labor costs as the only overhead allocationbase.Complete this question by entering your answers in the tabs below.$Cost DriverNumber of production runs194,400162,000Number of inspectionsNumber of units shippedPrepare the product line income statement using the proposed activity bases.Note: Do not round intermediate calculations. Input all amounts as positive values.Manager$ 1,036,800 $183,600129,600723,600 $Executive378,000291,600233,280388,800259, 200518,400$ 117,7201,150,200 $194,400162,000Activity LevelManager Executive20010020040012,0003,000793,800 $Total2,187,000378,000291,600233,280388,800259,200518,40001,517,400 Normandy Office Products (NOP) makes two types of office desks, Manager and Executive. The Executive model is adjustable usingelectric motors and is made with upgraded materials. The manufacturing process for the Executive model is more complex than thatfor the Manager model, requiring more frequent inspections and shorter production runs. The Manager model is a basic desk, usinggood, but easy to work with, materials, and is simpler to manufacture. NOP's results for the last fiscal year are shown in the followingstatement.Sales revenueDirect materialsDirect laborOverhead costsAdministrationMachine setupInspectionPacking and shippingOperating profitActivityMachine setupInspectionPacking and shippingRequired ANOP currently uses labor costs to allocate all overhead, but management is considering implementing an activity-based costingsystem. After interviewing the sales and production staff, management decides to allocate administrative costs on the basis of directlabor costs but to use the following bases to allocate the remaining costs:Required CNORMANDY OFFICE PRODUCTSAccountSales revenueDirect materialsDirect laborIncome StatementManager$ 1,036,800183,600129,600Executive$ 1,150,200194,400162,000Required:a. Prepare the product line income statement using the proposed activity bases.c. Restate the product line income statement for Normandy Office Products using direct labor costs as the only overhead allocationbase.Overhead costsOperating profit (loss)Complete this question by entering your answers in the tabs below.Cost DriverNumber of production runsNumber of inspectionsNumber of units shipped$Restate the product line income statement for Normandy Office Products using direct labor costs as the only overheadallocation base.Note: Do not round intermediate calculations. Input all amounts as positive values.ManagerExecutive$ 1,036,800 $ 1,150,200 $183,600194,400129,600162,000Total$ 2,187,000378,000291,600723,600 $ 793,800 $Activity LevelManager Executive20010020040012,0003,000< Required A233,280388,800259,200518,400$ 117,720Total2,187,000378,000291,60001,517,400Required C >

An income statement is prepared by an entity for the purpose of determining the profits. It reports…

Normandy Office Products (NOP) makes two types of office desks, Manager and Executive. The Executive model is adjustable using electric motors and is made with upgraded materials. The manufacturing process for the Executive model is more complex than that for the Manager model, requiring more frequent inspections and shorter production runs. The Manager model is a basic desk, using good, but easy to work with, materials, and is simpler to manufacture. NOP's results for the last fiscal year are shown in the following statement. Sales revenue Direct materials Direct labor Overhead costs. Administration Machine setup Inspection Packing and shipping Operating profit NORMANDY OFFICE PRODUCTS Income Statement Activity Machine setup Inspection Packing and shipping Manager Executive $ 1,036,800 $ 1,150,200 183,600 129,600 194,400 162,000 Total $ 2,187,000 Cost Driver Number of production runs Number of inspections Number of units shipped 378,000 291,600 NOP 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: 233,280 388,800 259,200 518,400 $ 117,720 Activity Level Manager 200 200 12,000 Executive 100 400 3,000 Required: a. Prepare the product line income statement using the proposed activity bases. c. Restate the product line income statement for Normandy Office Products using direct labor costs as the only overhead allocation base.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q