1.
Simple Costing System:
Simple costing system is one of method of costing to estimate the amount of allocating the
Activity Based Costing:
Activity based costing is one of the methods of costing to identify the activities performed to manufacture a product and to allocate the overhead cost of resources or indirect cost to the related products.
Income Statement:
Income statement is a business’s financial statement which tells the financial performance of a company in an accounting period. It shows the income generated by a company and expenses incurred by a company through its operations.
To prepare: Product line profitability report for HS under the simple costing system.
Given information:
Revenue from product BG is $59,500.
Cost of goods sold of product BG is $36,000.
Revenue from product MF is $66,000.
Cost of goods sold of product MF is $48,000.
Revenue from product FP is $51,000.
Cost of goods sold of product FP is $34,000.
Store support cost of product BG is $10,800.
Store support cost of product MF is $14,400.
Store support cost of product FP is $10,200.
2.
To prepare: Product line profitability report for HS under the activity based costing system.
Given information:
Gross margin of product BG is $23,500.
Gross margin of product MF is $18,000.
Gross margin of product FP is $17,000.
3.
To explain: The insight from ABC system to HS managers.
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Chapter 5 Solutions
Cost Accounting, Student Value Edition Plus MyAccountingLab with Pearson eText -- Access Card Package (15th Edition)
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