Prepare income statement using traditional method for the year ended Maple Hill has a conventional accounting system
Question:
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Prepare income statement using traditional method for the year ended
Maple Hill has a conventional accounting system which keeps track of overhead costs in four categories:
bottling equipment, facilities, processing, and general and administrative. There are sub-accounts in each of these accounts except for bottling equipment. The accounts, sub-accounts and costs for the most recent operating year are shown in Table 1. These costs are often called resource costs, and are labeled as such inthe OROS software system.
Maple Hill grows on site most of the feed needed at the dairy farm. The cost of producing the
feed and some additional feed purchased during the year is included under labor and materials for other processing costs
In addition to the overhead costs, Maple Hill has direct costs for bottles and other materials. These
materials are purchased from a variety of suppliers. Each glass bottle costs Maple Hill $.75, including
both purchase and recycling cost. Other ingredients include cocoa, sugar, and spices. Cocoa, used in the
production of chocolate milk, costs $.05 per bottle. Sugar, used in both chocolate milk and eggnog, costs
$.05 per bottle. Spices, used to make eggnog, cost $.08 per bottle. In total, 65,700 ounces of sugar and
cocoa were used in the production of chocolate milk, and 76,650 ounces of sugar and spice were used in the
production of eggnog
(Mixing: This process is only completed for chocolate milk and eggnog. In this process, sugar and
other ingredients are added and mixed into the milk to create the finished product. )
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