4-1 Direct, Indirect, and Unallocated Costs Smith Tool Co, is a supplier that assembles purchased parts into components for three distinct markets scooter parts, lawn mower parts, and hand tool parts. Following is the statement of operating income for the most recent period: Smith Tool: Statement of Operating Income Total $1,226,560 $417,450 60,000 _477.450 748,110 Sales Cost of goods sold Direct material Indirect production (allocated based on machine hours) Gross profit Selling and administrative expenses: Commissions Distribution to warehouses (allocated based on weight in kilograms) Income before unallocated expenses Unallocated expenses Corporate salaries Other general expenses Operating income before taxes 82,315 135,794 2 10.300 530,001 12,000 18.500 30.500 S 499 501 Smith Tool uses a traditional cost accounting system. Operating data used in the cost accounting system are as follows: Hand Tool Parts Scooter Parts $145,500 8,950 60,000 Lawn Mower Parts $175,950 1,650 495,000 596,000 1,400 110,000 Purchase cost of parts assembled Machine hours Weight of parts shipped to distributors (kilograms) Sales commissions per unit Units assembled and sold Sales price per unit $ 4.50 7,400 $ 78,00 S 1.10 21.200 S 15.50 $ 0,45 57.100 $ 5,65 Calculate the operating income or loss) for each product line. Use a format similar to Exhibit 4-3 on p. 130, 4-1 Direct, Indirect, and Unallocated Costs Smith Tool Co, is a supplier that assembles purchased parts into components for three distinct markets scooter parts, lawn mower parts, and hand tool parts. Following is the statement of operating income for the most recent period: Smith Tool: Statement of Operating Income Total $1,226,560 $417,450 60,000 _477.450 748,110 Sales Cost of goods sold Direct material Indirect production (allocated based on machine hours) Gross profit Selling and administrative expenses: Commissions Distribution to warehouses (allocated based on weight in kilograms) Income before unallocated expenses Unallocated expenses Corporate salaries Other general expenses Operating income before taxes 82,315 135,794 2 10.300 530,001 12,000 18.500 30.500 S 499 501 Smith Tool uses a traditional cost accounting system. Operating data used in the cost accounting system are as follows: Hand Tool Parts Scooter Parts $145,500 8,950 60,000 Lawn Mower Parts $175,950 1,650 495,000 596,000 1,400 110,000 Purchase cost of parts assembled Machine hours Weight of parts shipped to distributors (kilograms) Sales commissions per unit Units assembled and sold Sales price per unit $ 4.50 7,400 $ 78,00 S 1.10 21.200 S 15.50 $ 0,45 57.100 $ 5,65 Calculate the operating income or loss) for each product line. Use a format similar to Exhibit 4-3 on p. 130