Activity-based reporting.The Carter Corporation manufactures oxygen tanks
for hospitals.Information regarding resources for the month of March follows.

In addition,$22,000 was spent on 700 quality inspections with a cost driver rate of $30,and $8,000 was spent on 200 customer-service cost driver units with a cost driver rate of $35.Sales for March were $350,000.Management has requested the following statements be prepared.
Required:
a.Prepare a traditional income statement.
b.Prepare an activity-based income statement.
c.Write a short report explaining why the activity-based income statement provides better information to managers.

Question

Activity-based reporting.The Carter Corporation manufactures oxygen tanks
for hospitals.Information regarding resources for the month of March follows.
  
In addition,$22,000 was spent on 700 quality inspections with a cost driver rate of $30,and $8,000 was spent on 200 customer-service cost driver units with a cost driver rate of $35.Sales for March were $350,000.Management has requested the following statements be prepared.
Required:
a.Prepare a traditional income statement.
b.Prepare an activity-based income statement.
c.Write a short report explaining why the activity-based income statement provides better information to managers.

Quizplus · Accepted Answer

The Answer of Activity-based reporting.The Carter Corporation manufactures oxygen tanks
for hospitals.Information regarding resources for the month of March follows.
  
In addition,$22,000 was spent on 700 quality inspections with a cost driver rate of $30,and $8,000 was spent on 200 customer-service cost driver units with a cost driver rate of $35.Sales for March were $350,000.Management has requested the following statements be prepared.
Required:
a.Prepare a traditional income statement.
b.Prepare an activity-based income statement.
c.Write a short report explaining why the activity-based income statement provides better information to managers.

Activity-Based Reporting.The Carter Corporation Manufactures Oxygen Tanks