Problem $9-60($Stetic$)$ AcloptIng an Actlvity$-$Based Costing System $($LO $9-3,5,6)$

Nall Products manufactures a wide varlety of products in several facilltles. It produces three models of mobility scooters in its St$.$ Clalre

plant: models NP$-10,$ NP$-20,$ and NPX$-70.$ The machine and labor times for the three models are similar. The difference in the

production process is in the amount of testing, slze of the production runs, and so on$.$ The St$.$ Clalr plant allocates manufacturing

overhead based on machine$-$hours. Last month, the company shlpped $750NP-105,500NP-205,$ and $250NPx-705.$ The revenues and

expenses for the last month were as follows:

After a revlew of operational and financlal practices at the plant, a consultant recommended that the St$.$ Clalr plant adopt an ABC

system for computing product costs to provide better information for routine decisions. The consultant also recommended the

following actlvitles and drivers be used in the system:

The consultant also suggested not allocating the flxed costs to products, because "there does not seem to be much of a link between

the costs and production activity."

Requlred:

a$.$ Using machine$-$hours to allocate production overhead, complete the income statement for Nall Products for the month. Follow the

consultant's recommendation and do not attempt to allocate general plant support or other floced costs.

b$.$ Complete the Income statement using the bases recommended by the consultant.

c$.$ How might actlilty$-$based costing result in better declsions by Nall Product's management?

Complete this question by entering your answers in the tabs below.

Using machine$-$hours to allocate production overhead, complete the income statement for Nall Products for the month. Follow

the consultant's recommendation and do not attempt to allocate general plant support or other fixed costs.

Note: Input all amounts as positive values.