Allcott Computer Services (ACS) provides computer training and repair services f
ID: 2554544 • Letter: A
Question
Allcott Computer Services (ACS) provides computer training and repair services for schools and local businesses. Sales for year 1 totaled $3,000,000. Information regarding resources for the year includes the following:
In addition, ACS spent $86,000 on 530 repair verifications with a cost driver rate of $145.
Required:
a. Management has requested that you do the following:
Prepare a traditional income statement.
b. Prepare an activity-based income statement.
Activity Based Income Statement
Resources Used Resources Supplied Marketing $ 228,000 $ 241,000 Depreciation 171,000 178,000 Training personnel 92,000 107,000 Energy 155,000 173,000 Short-term labor 500,000 620,000 Long-term labor 820,000 840,000 Administrative 131,000 160,000Explanation / Answer
Solution:
Given:
Resources Used
Resources Supplied
Unused Resources
(Resources Supplied - Resources Used)
Marketing
$
228,000
$
241,000
$ 13,000
Depreciation
171,000
178,000
7,000
Training personnel
92,000
107,000
15,000
Energy
155,000
173,000
18,000
Short-term labor
500,000
620,000
120,000
Long-term labor
820,000
840,000
20,000
Administrative
131,000
160,000
29,000
Total
2,097,000
2,319,000
$ 222,000
a. Traditional income statement
Sales Revenue
$3,000,000
Marketing
$ 241,000
Depreciation
$ 178,000
Training personnel
$107,000
Energy
$ 173,000
Short-term labor
$ 620,000
Long-term labor
$ 840,000
Administrative
$ 160,000
Repair Verification
$86,000
Total Cost
$ 2,405,000
Operating Profit
$ 595,000
b. Activity Based Income Statement
Resources Used
Unused Resource Capacity
Resources Supplied
Sales Revenue
$3,000,000
Costs
Unit
Energy
$ 155,000
$ 18,000
$ 173,000
Short-term labor
500,000
120,000
620,000
Total
$ 655,000
$ 138,000
$ 793,000
Batch
Repair Verification
$ 76,850*
$ 9,150
$86,000
Total
$ 76,850
$ 9,150
$86,000
Product and Customer sustaining
Marketing
$ 228,000
$ 13,000
$ 241,000
Training personnel
$ 92,000
$ 15,000
$ 107,000
Total
$320,000
$28,000
$348,000
Capacity Sustaining
Administrative
$ 131,000
$ 29,000
$ 160,000
Depreciation
$ 171,000
$ 7,000
$ 178,000
Long-term labor
$ 820,000
$ 20,000
$ 840,000
Total
$1,122,000
$56,000
$1,178,000
Total Costs
$2,173,850
$231,150
$2,405,000
$2,405,000
Operating Profit
$ 595,000
* Repair Verification (used) = 530 X $ 145 = $76,850
Resources Used
Resources Supplied
Unused Resources
(Resources Supplied - Resources Used)
Marketing
$
228,000
$
241,000
$ 13,000
Depreciation
171,000
178,000
7,000
Training personnel
92,000
107,000
15,000
Energy
155,000
173,000
18,000
Short-term labor
500,000
620,000
120,000
Long-term labor
820,000
840,000
20,000
Administrative
131,000
160,000
29,000
Total
2,097,000
2,319,000
$ 222,000
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