4-A1 Direct, Indirect, and Unallocated Costs, Process Map

Penguin Window Company makes and sells three product linescustom detailed windows, large standard windows, and small standard windows. The statement of operating income for the most recent period is shown below.

Penguin uses a traditional cost accounting system. A process map developed to describe this system is shown in Exhibit 4-17. To aid in the companys analysis of its product mix strategy, you have been asked to determine operating income (loss) for each product line. Use a format similar to Exhibit 4-3 on page 130 in the text.

Penguin Window Company Statement of Operating Income
		Total
Sales		$307,900
Cost of goods sold
Direct material	$47,800
Indirect production costs	50,000	97,800
Gross profit		210,100
Selling and administrative expenses:
Commissions	14,800
Distribution to warehouses	10,900	25,700
Income before unallocated expenses		184,400
Unallocated expenses
Administrative salaries	8,200
Other administrative expenses	4,500	12,700
Operating income before taxes		$ 171,700