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 AProd BBeginning inventory 0 Units produced 10,000 2,500 7,500Units sold 8,000 2,000 6,000Selling price per unit $255 480 180Variable costs per unit Direct material 100 280 40 Direct labor 60 60 60 Variable overhead 25 40 20 Variable selling and admin. exp. 10 13 9Fixed costs Fixed manufacturing overhead 200,000 Fixed selling and administrative 100,000Production runs (not $)1006535Number of sales reps (not $) 25 1510Here 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 CompanySegmented Income StatementFor the period ending Dec. 31, 2011 A B TotalSales $960,000 $1,080,000 $2,040,000Variable costs: Direct material 560,000 240,000 800,000The submission should be 2 to 4 pages and need to include answers to all the questions listed above. Show computations, discuss the results and include references in APA format.
padding: 10px 20px;
margin: 4px 2px;