Question:
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.