Homework Help is Here – Start Your Trial Now!
Business
Accounting
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 Manager $ 1,075,200 190,400 134,400 Executive $ 1,192,800 201,600 168,000 Total $ 2,268,000 392,000 302,400 241,920 403,200 268,800 537,600 $ 122,080 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: Activity Level Activity Cost Driver Manager Executive Machine setup Inspection Packing and shipping Number of production runs Number of inspections Number of units shipped 200 200 100 400 12,000 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.

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 Manager $ 1,075,200 190,400 134,400 Executive $ 1,192,800 201,600 168,000 Total $ 2,268,000 392,000 302,400 241,920 403,200 268,800 537,600 $ 122,080 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: Activity Level Activity Cost Driver Manager Executive Machine setup Inspection Packing and shipping Number of production runs Number of inspections Number of units shipped 200 200 100 400 12,000 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Answer in step by step with explanation. Don't use Ai and chatgpt
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 Manager $ 1,075,200 190,400 134,400 Executive $ 1,192,800 201,600 168,000 Total $ 2,268,000 392,000 302,400 241,920 403,200 268,800 537,600 $ 122,080 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: Activity Level Activity Cost Driver Manager Executive Machine setup Inspection Packing and shipping Number of production runs Number of inspections Number of units shipped 200 200 100 400 12,000 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.
Transcribed Image Text: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 Manager $ 1,075,200 190,400 134,400 Executive $ 1,192,800 201,600 168,000 Total $ 2,268,000 392,000 302,400 241,920 403,200 268,800 537,600 $ 122,080 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: Activity Level Activity Cost Driver Manager Executive Machine setup Inspection Packing and shipping Number of production runs Number of inspections Number of units shipped 200 200 100 400 12,000 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.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS