Activity-based reporting. The Beam Corporation manufactures airplane propellers.

Information regarding resources for the month of March follows:

In addition, $2,500 was spent on ten engineering changes with a cost driver rate of $250, and $3,000 was spent on four outside contracts with a cost driver rate of $750.
There was no unused capacity for these two activities. Sales for March were $100,000. Management has requested that you:

a. prepare a traditional income statement (like Exhibit 4.9).

b. prepare an activity-based income statement (like Exhibit 4.10).

c. write a short report explaining why the activity-based income statement provides better information to managers. Use information for Beam Corporation in examples.

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Resources Resources Used Supplied Parts Management $3,000 $3,500 Energy 5,000 5,000 Quality Inspections 4.500 5,000 Long-term Labor 2,500 3.500 Short-term Labor 2,000 2,400 Setups 7,000 10,000 Materials 15.000 15.000 Depreciation 6.000 10,000 Marketing 7,000 7,500 Customer Service 1,000 2,000 Administrative 5,000 7,000