Traditional Income Statement

Blue Black Red Purple Total

Sales 75000 60000 13950 1650 150600
Material Cost 25000 20000 4680 550 50230
Direct Labor 10000 8000 1800 200 20000
Overhead @300% 30000 24000 5400 600 60000
Total Operating Income 10000 8000 2070 300 20370
Return On Sales 13.33% 13.33% 14.8% 18.2% 13.5%

Direct Cost & Activity Cost Drivers

Blue Black Red Purple Total
Prod Sales Volume 50000 40000 9000 1000 100000
Unit Selling Price 1.5 1.5 1.55 1.65
Material Cost/Unit 0.5 0.5 0.52 0.55
Direct Labor Hours/Unit 0.02 0.02 0.02 0.02 2000
Machine Hours/Unit 0.1 0.1 0.1 0.1 10000
Production Runs 50 50 38 12 150
Setup time/run 4 1 6 4
Total Setup time(hours) 200 50 228 48 526
Parts Administration 1 1 1 1 4

Total Cost
For Total For
different Different
activities Activity Cost Rate
Production Run 22000 150 146.6667
Part Admin (Record Keeping) 4800 4 1200
Setup Cost (Change Over) 11200 526 21.29278
Machine Cost 14000 10000 1.4
Fringe Benefits of direct labor 8000 2000 4

P&L
Blue Black Red Purple
Prod Sales Volume 50000 40000 9000 1000
Unit Selling Price 1.5 1.5 1.55 1.65
Material Cost/Unit 0.5 0.5 0.52 0.55
Sales Revene 75000 60000 13950 1650
Total Material Cost 25000 20000 4680 550
Direct Labor Cost 10000 8000 1800 200
Income (Excluding Overhead) 40000 32000 7470 900
Overhead Cost
Production Run Cost 7333.333 7333.333 5573.333 1760
Part Admin Cost 1200 1200 1200 1200
Setup Cost 4258.555 1064.639 4854.753 1022.053
Machine Cost 7000 5600 1260 140
Fringe Benefits D.L Cost 4000 3200 720 80
Total OverHead Cost 23791.89 18397.97 13608.09 4202.053
Total Cost 58791.89 46397.97 20088.09 4952.053
Total Operating Income 16208.11 13602.03 -6138.09 -3302.05
Return On Sales 21.61% 22.67% -44.00% -200.12%
Per unit Cost 1.176 1.160 2.232 4.952
Diff BW Selling price and Cost 0.324 0.340 -0.682 -3.302
 Total Labor
Cost 56000

Indirect Cost
Expense Category Expense
Indirect Labor 20000
Fringe Benefits 16000
Computer Systems 10000
Machinery 8000
Maintenance 4000
Energy 2000
Total 60000

40% of direct and indirect labor with 50% break up both in direct and indirect labor
Direct Labor Indirect Labor
Fringe Benefits 8000 8000

Indirect Labor 28000

1 Half of indirect Labor, Scheduling & Handling Production Runs
2 40% Indirect Labor for Physical Change over from one pen to other
3 10% of indirect labor, maintaining records on the four products (Parts Admin)

Computer System 10000

1 80% in production run activity 8000
2 20% used to keep records on four products (Parts Admin) 2000

Machine 14000
1 Incurred to supply machine capacity to produce the pens (Support Activity)
14000
11200
2800