Required: a. Prepare a traditional income statement. b. Prepare an activity-based income statement.
Required: a. Prepare a traditional income statement. b. Prepare an activity-based income statement.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Carbon Company provides the following information about resources.
| Unused Resources Capacity | Cost Driver Volume | ||||
| Resources used | |||||
| Materials | $ | 2,500 | 10,000 | pounds | |
| Energy | 5,750 | 360 | machine-hours | ||
| Setups | 0 | 89 | setups | ||
| Purchasing | 4,000 | 90 | purchase orders | ||
| Customer service | 7,900 | 70 | returns | ||
| Long-term labor | 4,150 | 350 | labor-hours | ||
| Administrative | 4,880 | 440 | labor-hours | ||
| Resources supplied | |||||
| Materials | $ | 122,500 | |||
| Energy | 21,950 | ||||
| Setups | 24,920 | ||||
| Purchasing | 26,500 | ||||
| Customer service | 20,500 | ||||
| Long-term labor | 29,700 | ||||
| Administrative | 28,200 | ||||
Sales revenue for Carbon Company is $590,000.
Required:
a. Prepare a traditional income statement.
b. Prepare an activity-based income statement.
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