Preparing income statement using the traditional accounting system
This company has two products: Kasement and lasient
Kasement Lasient
Direct materials $7 $7
Direct labor hours 0.5 0.5
Direct labor cost/hr $10 $10
Sales price per unit $32 $38
Value of
Total costs Allocation Base allocation base
Equip. Setups $12,500,000 # of setups 50,000
purchase orders $8,000,000 # of orders 160,000
machining $12,000,000 # of machine hrs 1,000,000
testing $3,600,000 # of testing hrs 600,000
packaging $4,600,000 # of containers 1,000,000
kasement lasient
annual sales & production in units 240,000 4,800
# of units/batch 150 40
#of orders 450 80
# of machine hrs/unit 0.40 0.80
testing hours 12,000 8,400
# of containers 1,400 600
Q: Prepare and income statement for each product using the traditional accounting system. The income statements should be prepared on a total basis and then show the average net operating income per unit using the following template for guidance:
kasement lasient
Sales $$$ $$$
Direct materials $$$ $$$
Direct labor $$$ $$$
manufacturing overhead $$$ $$$
Total costs $$$ $$$
Net operating income $$$ $$$
average operating income/unit $$$ $$$
