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CLASSIC PEN COMPANY

CLASSIC PEN COMPANY. SUMMARY BACKGROUND. Produced 2 Pens- Blue & Black. Started Producing Red and Purple Pens As Well. The Profits Started to Decrease With the Introduction of 4 Colors. All pens produced in one factory.

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CLASSIC PEN COMPANY

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  1. CLASSIC PEN COMPANY

  2. SUMMARY BACKGROUND • Produced 2 Pens- Blue & Black. • Started Producing Red and Purple Pens As Well. • The Profits Started to Decrease With the Introduction of 4 Colors. • All pens produced in one factory. • Ink is filled in the pens after the colors are mixed. This makes machinery to be cleaned during transition from one color to another. • Currently applies overhead on the basis of direct labor cost.

  3. Income Statement

  4. Activities and Activity Rates

  5. First Stage Allocation

  6. First Stage Allocation

  7. Activity Rates

  8. Activity Rates

  9. Second Stage Allocation

  10. Second Stage Allocation

  11. Product Costing

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