Question 1
Spiess Corporation has two major business segments--Apparel and Accessories. Data
concerning those segments for December appear below:
$ 774,000
$ 340,000
$ 174,000
$ 849,000
$ 520,000
$ 102,000
Sales revenues, Apparel
Variable expenses, Apparel
Traceable fixed expenses, Apparel
Sales revenues, Accessories
Variable expenses, Accessories
Traceable fixed expenses, Accessories
Common fixed expenses totaled $457,000 and were allocated as follows: $163,000 to the
Apparel business segment and $294,000 to the Accessories business segment.
Required:
Prepare a segmented income statement in the contribution format for the company.
Question 2
Musich Corporation has an activity-based costing system with three activity cost pools-Machining, Setting Up, and Other. The company's overhead costs, which consist of equipment
depreciation and indirect labor, have been allocated to the cost pools already and are provided in
the table below.
Activity Cost Pools
Machining Setting Up Other
Total
Equipment depreciation $ 8,800 $ 47,200 $ 23,200 $ 79,200
Indirect labor
3,600
2,600
3,800
10,000
Total
$ 12,400 $ 49,800 $ 27,000 $ 89,200
Costs in the Machining cost pool are assigned to products based on machine-hours (MHs) and
costs in the Setting Up cost pool are assigned to products based on the number of batches.
Costs in the Other cost pool are not assigned to products. Data concerning the two products and
the company's costs appear below:
MHs
Product Z3
Product T1
Total
5,700
5,900
11,600
Batches
600
1,200
1,800
Product Z3
Sales (total)
Direct materials (total)
Direct labor (total)
$ 224,800
$ 82,500
$ 109,400
Product T1
$ 252,500
$ 97,000
$ 103,700
Required:
a. Calculate activity rates for each activity cost pool using activity-based costing.
b. Determine the amount of overhead cost that would be assigned to each product using activitybased costing.
c. Determine the product margins for each product using activity-based costing.