Nutterco, Inc., produces two types of nut butter: peanut butter and cashew butter. Of the two, peanut butter is the more popular. Cashew is a specialty line using smaller jars and fewer jars per case. Data concerning the two products follow: Peanut Cashew Unused units of Butter Capacity Purchase Butter Expected sales (in cases) Selling price per case Direct labor hours Receiving orders Packing orders Material cost per case Direct labor cost per case Advertising costs aPractical capacity less expected usage (all unused capacity is permanent) In some cases, activity capacity must be purchased in steps (whole units). These steps are provided as necessary. The cost per step is the fixed activity rate multiplied by the step units. The fixed activity rate is the expected fixed activity costs divided by practical activity capacity Annual overhead costs are listed below. These costs are classified as fixed or variable with respect to the appropriate activity driver 50,000 $100 40,000 500 1,000 $50 $10 10,000 $80 10,000 As needed 500 250 250 250 500 500 $48 $8 200,000 $60,000 Annual overhead costs are listed below. These costs are classified as fixed or variable with respect to the appropriate activity driver. Activity Direct labor benefits Machine Receiving Packing ixed Variableb 0 $200,000 00,000 250,0 200,000 22,500 100000 45,000 Total costs Costs associated with practical activity capacity. The machine fixed costs are all depreciation with direct labor hours as the driver. These costs are for the actual levels of the cost driver. $500,000 $517,500 1. Prepare a traditional segmented income statement, using a unit-level overhead rate based on direct labor hours. Nutterco, Inc. Traditional Income Statement Revenues 5,000,000| $ 800,000 | $15.300,000 Less variable expenses: Direct materials Direct labor Variable overhead | 2,500,000 | | 480,000 | 2,980,000 | 50,000 80,000 580,000 360,000 90,000 450,000 1,640,000 150,0001,790,000 Contribution margin Less direct fixed expnses 200,000 60,000 V 260,00 $| 1,530,000 | 1.440,000 | V 90,000 | Product margin Less common fixed expenses 500,000 X 1,080,000 X Operating income 2. Prepare an activity-based segmented income statement. Use a minus sign to indicate a negative product margin. Nutterco, Inc. Peanut Butter Cashew Butter Total Revenues Less variable costs Contribution margin Less traceable expenses: 5,000,000 | 800,000 | 5,800,000 | 3,360,000 | | 650,000 | | 4,010,000 | 1,640,000$150,000 1,790,000 200,00060,000260,000 Advertising Receiving Y Packing Product margin Less unused activity expenses: RecelvingY Packing Common fixed expenses (machine depreciation) Operating income