Activity Based Reporting: Service Organization
Allcott Computer Services (ACS) provides computer training and repair services for schools and local businesses. Sales for year 1 totaled $1,350,000. Information regarding resources for the year includes the following:
|
|
Resources Used |
Resources Supplied |
|
Marketing |
$112,000 |
$120,000 |
|
Depreciation |
87,000 |
89,500 |
|
Training personnel |
45,000 |
54,000 |
|
Energy |
80,000 |
85,500 |
|
Short term labor |
225,000 |
310,000 |
|
Long term labor |
415,000 |
425,000 |
|
Administrative |
70,000 |
79,000 |
In addition, ACS spent $42,000 on 500 repair verifications with a cost driver rate of $75.
Required
Management has requested that you do the following:
a. Prepare a traditional income statement.
b. Prepare an activity based income statement.
c. Write a short report to management explaining why the activity based income statement provides useful information to managers. Use the information from requirements (a) and (b) to develop examples for your report.