Tri-State Mill uses a special sander to finish lumber. Data on the sander and its usage follow.

	Cost Driver Rate			Cost Driver Volume
Resources used
Energy	$	0.80	per machine-hour	5,500	machine-hours
Repairs	$	20	per job	550	jobs
Resources supplied
Energy	$	7,100
Repairs	$	12,200

Sales revenue from finishing totaled $32,000.

Required:

a. Prepare a traditional income statement.

b. Prepare an activity-based income statement.

Prepare a traditional income statement.

A

Traditional Income Statement
Finishing sales
Energy costs
Repair costs
Operating profit

B

Prepare an activity-based income statement.

Activity-Based Income Statement
	Resources Used	Unused Resource Capacity	Resources Supplied
Finishing sales
Costs
Volume related - Energy
Batch related - Repairs
Total costs
Finishing operating profits