Annandale, Inc., produces and sells wireless reading devices. A competitor, Danube Electronic Products, sells similar wireless reading devices that it purchases at wholesale from Sonex 

Exhibit 4-17

Process Map for Penguin Window Company’s Traditional Cost Allocation System

For $75 each. Both sell the devices for $180. In 20X9 Annandale produced 12,000 devices at the following costs:

Assume that Annandale had no beginning inventory of direct materials. Neither company had any beginning inventory of finished devices, but both had ending inventory of 2,500 finished devices. Ending work-in-process inventory for Annandale was negligible.

Each company sold 9,500 devices for $1,710,000 in 20X9 and incurred the following selling and administrative costs:

Sales salaries and commissions …….. $110,000

Depreciation on retail store …………….. 45,000

Advertising …………………………….. 10,000

Other …………………………………….. 5,000

Total selling and administrative cost … $170,000

1. Prepare the inventories section of the balance sheet for December 31, 20X9, for Danube.

2. Prepare the inventories section of the balance sheet for December 31, 20X9, for Annandale.

3. Using the cost of goods sold format on page 134 as a model, prepare an income statement for the year 20X9 for Danube.

4. Using the cost of goods sold format on page 134 as a model, prepare an income statement for the year 20X9 for Annandale.

5. Summarize the differences between the financial statements of Danube, a merchandiser, and Annandale, a manufacturer.

6. What purpose of a cost management system is being served by reporting the items in requirements 1–4?

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$8,200 Salaries Other Costs Indirect Costs $50,000 Casts $10,900 $4,500 Machine Hours Kilograms Material $5,800 Commissions $1,200 Material $19,000 Commissions $3,000 :Material $23,000 $10,600 Custom Detaled 5mal Standard Unallocated Costs $12,700 1,365 Machine Hours 28,500 K3lograms 1,800 Windows Sold at 32/Unit 210 Machine Hours 57,000 Kilograms 5,300 Windows Sold at $11/Unit 525 Machine Hours 199,500 KGlograms 24,000 Windows Sold at $8/Unit Direct materials purchased Direct materials used Direct labor Indirect production: S530,000 $490,000 200,000 Depreciation Indirect labor Other 35,000 20,000 155,000 210,000 $900,000 Total cost of production