Second-Stage Allocations and Margin Calculations Using the Action Analysis Approach
Refer to the data for Theatre Seating. Inc., in Exercise 7-13 and the following additional details concerning the activity rates:
| Activity Rates | |||
| Supporting Direct Labor | Batch Processing | Order Processing | Customer Service |
Manufacturing overhead : | ||||
Indirect labor | $ 1.80 | $72.00 | $ 18.00 | $ 0.00 |
Factory equipment depreciation | 7.35 | 3.25 | 0.00 | 0.00 |
Factory administration | 2.10 | 7.00 | 28.00 | 268.00 |
Selling and administrative: Wages and salaries | 0.50 | 13.00 | 153.00 | 1,864.00 |
Depreciation | 0.00 | 0.75 | 6.00 | 26.00 |
Marketing expenses | 0.25 | 0.00 | 79.00 | 462.00 |
Total activity rate | $12.00 | $96.00 | $284.00 | $2,620.00 |
Management has provided their ease of adjustment codes for purposes of preparing action analyses.
| Ease of Adjustment Codes |
Direct materials | Green |
Direct labor | Yellow |
Manufacturing overhead:Indirect labor | Yellow |
Factory equipment depreciation | Red |
Factory administration | Red |
Selling and administrative: Wages and salaries | Red |
Depreciation | Red |
Marketing expenses | Yellow |
Required:
Using Ex hibit7A-5 as a guide, prepare an action analysis report for CineMax Entertainment similar to those prepared for products.
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