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Management Accounting: Income, Product Costing, and Allocation

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Leidenheimer Corporation manufactures small airplane propellers. Sales for April totaled $850,000. Information regarding resources for the month follows:

Resources Used Resources Supplied
Parts management $30,000 $35,000
Energy 50,000 50,000
Quality inspections 45,000 50,000
Long-term labor 25,000 35,000
Temporary labor 20,000 24,000
Setups 70,000 100,000
Materials 150,000 150,000
Depreciation 60,000 100,000
Marketing 70,000 75,000
Customer service 10,000 20,000
Administrative 50,000 70,000

In addition, Leidenheimer spent $25,000 on 50 engineering changes with a cost driver rate of $500 and $30,000 on eight outside contracts with a cost driver rate of $3,750.

a. Prepare a traditional income statement.
b. Prepare an activity-based income statement.

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Solution Summary

This response is an example of a traditional income statement and an activity-based income statement.

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