ACC202 - 100,000 Production runs(not $ Number of sales...

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Herrestad Company does produce and sell two products and the details below will be used to prepare a  segmented income statement (showing the income for each product and the total) for the company. Use  ABC to allocate all fixed costs to the two products. Background information Total Prod A Prod B Beginning inventory Units produced 10,000 2,500 7,500 Units sold 8,000 2,000 6,000 Selling price per unit $300 540 220 Variable costs per unit Direct material 120 270 70 Direct labor 90 60 60 Variable overhead 40 85 25 Variable selling and admin. exp. 10 13 9 Fixed costs Fixed manufacturing overhead 250,000 Fixed selling and administrative
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Unformatted text preview: 100,000 Production runs (not $) 100 75 25 Number of sales reps (not $) 30 20 10 Here are the first few lines of the segmented income statement to help you get started. Complete the statement in good format and make sure you allocate the fixed costs to the two products. When done, comment on the information and the relative profitability of the two products. Herrestad Company Segmented Income Statement For the period ending Dec. 31, 2011 A B Total Sales $1,080,000 $1,320,000 $2,400,000 Variable costs: Direct material 540,000 420,000 960,000...
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