Leidenheimer Corporation manufactures small airplane propellers. Sales for year 2 totaled $1,700,000. Information regarding resources for the month follows:

In addition, Leidenheimer spent $50,000 on 50 engineering changes with a cost-driver rate of $1,000 and $60,000 on eight outside contracts with a cost driver rate of $7,500.

Required
Management has requested that you do the following:
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 useful information to managers. Use the information from requirements (a) and (b) to develop examples for yourreport.

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Resources Used Resources Supplied Parts management Energy Quality inspections .. Long-term labor. Short-term labor Setups $ 60,000 100,000 90,000 50,000 40,000 140,000 300,000 120,000 140,000 20,000 100,000 $ 70,000 100,000 100,000 70,000 48,000 200,000 300,000 200,000 150,000 40,000 140,000 -.- Materials. . .. Depreciation..- Marketing Customer service .. Administrative