please answer within the format by providing formula the detailed workingPlease provide answer in text (Without image)Please provide answer in text (Without image)Please provide answer in text (Without image) Problem 9-53 (Static) Comparative Income Statements and Management Analysis (LO 9-1, 5, 6)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 setupNORMANDY OFFICE PRODUCTSIncome StatementInspectionPacking and shippingManagerExecutive$ 960,000 $ 1,065,000170,000120,000180,000150,000NOP 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:Total$ 2,025,000350,000270,000Cost DriverNumber of production runsNumber of inspectionsNumber of units shipped216,000360,000240,000480,000$ 109,000Activity LevelManager20020012,000Executive1004003,000Required: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.

Under activity-based costing method, the cost is allocated to each activity based on its…

Problem 9-53 (Static) Comparative Income Statements and Management Analysis (LO 9-1, 5, 6) 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 $ 960,000 170,000 120,000 Executive $ 1,065,000 180,000 150,000 Total $ 2,025,000 Cost Driver Number of production runs Number of inspections Number of units shipped 350,000 270,000 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: 216,000 360,000 240,000 480,000 $ 109,000 Activity Level Manager Executive 100 400 3,000 200 200 12,000 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