Flodesk, Ltd., manufactures desk lamps and floor lamps. Information regarding resources for the month of March follows:

In addition, $2,500 was spent on 10 engineering changes with a cost driver rate of $250, and $3,000 was spent on four outside contracts with a cost driver rate of $750. There was no unused capacity for these two activities. Sales for March were $100,000. Management has requested that you:
a. Prepare a traditional income statement.
b. Prepare an activity-based income statement.
c. Write a short report explaining why the activity-based income statement provides better information to managers. Use information from Flodesk inexamples.

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Resources Used Resources Supplied Parts Management Energy Quality Inspections Long-term Labor Short-term Labor Setups Materials Depreciation Marketing Customer Service Administrative 3,000 5,000 4,500 2,500 2,000 7,000 15,000 6,000 7,000 1,000 5,000 $3,500 5,000 5,000 3,500 S 2,400 10,000 15,000 10,000 7,500 2,000 7,000