Question
Need help to see if theincome report below is correct as noted below......... Shadow Awnings makes custom awnings for homes and businesses.The company uses an
Need help to see if theincome report below is correct as noted below.........
Shadow Awnings makes custom awnings for homes and businesses.The company uses an activity-based costing system for its overhead costs.The company has provided the following data concerning its annual overhead costs and its activity cost pools:
Overhead Costs:
Production Overhead $150,000
Office Expense $100,000
Total $250,000
Distribution of Resource Consumption:
Activity Cost Pools Making Awnings Job Support Other Total
Production Overhead 45% 40% 15% 100%
Office Expense8% 65% 27%100%
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.The amount of activity for the year is as follows:
Activity Cost Pool Annual Activity
Making Drapes 5,000 metres
Job Support 200 jobs
Other N/A
c) Set up an income report in good form of a job that involves making 80 metres of awnings and has direct materils and direct labour costs of $3,000.The sales revenue from this job is $4,000.
Sales $4,000
Cost of Goods Sold:
Direct Materials & Direct Labour $3,000
Manufacturing Overhead$1,380$4,380
Gross Margin $(380)
Selling and Administrative Expenses:
Office Expense $326.60$326.60
Operating Income $(706.60)
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