Leidenheimer Corporation manufactures small airplane propellers. Sales for year

Question

Leidenheimer Corporation manufactures small airplane propellers. Sales for year 2 totaled $880,000. Information regarding resources for the year follows:

In addition, Leidenheimer spent $40,500 on 45 engineering changes with a cost-driver rate of $900 and $60,000 on 8 outside contracts with a cost driver rate of $7,500.

Prepare an activity-based income statement. (Input all values as positive numbers.)

Leidenheimer Corporation manufactures small airplane propellers. Sales for year 2 totaled $880,000. Information regarding resources for the year follows:

Explanation / Answer

Answer:(a)Traditional income statement:

Answer:(b) Activity-based income statement:

Answer:(c) Activity -Based income statement provides useful information to managers.

Particulars Amount ($) Sales 880000 Parts management 34000 Energy 53000   Quality inspections 48000 Long-term labor 38000 Short-term labor 23000 Setups 110000 Materials 130000 Depreciation 110000 Marketing 74000 Customer service 20000 Administrative 56000 Engineering changes 40500 Outside contracts 60000 Total costs 796500 Operating Profit 83500

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