Chapter-5updated.pptVIP

Traditional Costing System and Statement of Operating Income All indirect resources $220,000 All unallocated value chain costs $30,000 Cost driver (direct labor hours) Direct materials for pen casings $22,500 Direct labor for pen casings $135,000 Direct materials for cell phone casings $12,000 Direct labor for cell phone casings $15,000 Sales $360,000 Sales $80,000 Unallocated $30,000 Traditional Costing System and Statement of Operating Income Sales $440,000 $360,000 $80,000 Direct materials 34,500 22,500 12,000 Direct labor 150,000 135,000 15,000 Indirect manufacturing 220,000 198,000 22,000 Gross profit $ 35,500 $ 4,500 $31,000 Corporate expenses 30,000 Operating Income $ 5,500 Gross profit margin 1.25% 38.75% Traditional Cost Allocation System Pen Casings Cell Phone Casings Activity-Based Cost System All unallocated value chain costs $30,000 Unallocated $30,000 Direct materials for pen casings $22,500 Direct labor for pen casings $135,000 Direct materials for cell phone casings $12,000 Direct labor for cell phone casings $15,000 Sales $360,000 Sales $80,000 Plant machinery $80,000 Production support $140,000 Processing activity $76,000 Production support activity $144,000 80% 20% 60% 40% Activity-Based Cost Allocation System External Reporting Internal Purposes Sales $440,000 $360,000 $80,000 Direct materials 34,500 22,500 12,000 Direct labor 150,000 135,000 15,000 Plant and Machinery 80,000 48,000 32,000 Production support 140,000 28,000 112,000 Gross profit $ 35,500 $ 126,500 ($91,000) Corporate expenses 30,000 Operating Income ($ 5,500) Gross profit margin 8.07% 35.14% (113.75%) Pen Casings Cell Phone Casings Homework P5-2, P5-3, P5-4, P5-5, P5-9 P5-2 Cost driver budgeted sales Sunnyville=$60,000 from (6/20*200,000) Wedgewood=$100,000 from (10/20*200,000) Captial=$40,000 fr