Chapter 10, Problem 57P

Activity-Based Reporting: Service Organization

 Allcott Computer Services (ACS) provides computer training and repair services for schools and local businesses. Sales for year 1 totaled $1,350,000. Information regarding resources for the year includes the following:

 In addition. ACS spent $42,000 on 500 repair verifications with a cost driver rate of $75. Required

Management has requested that you do the following:

1. a.      Prepare a traditional income statement.
2. b.      Prepare an activity-based income statement.
3. c.       Write a short report to management explaining why the activity-based income statement provides useful information to managers. Use the information from requirements (a) and (b) to develop examples for your report.