CLASSIC PEN COMPANY. SUMMARY BACKGROUND Produced 2 Pens- Blue & Black. Started Producing Red and Purple Pens As Well. The Profits Started to Decrease.

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Presentation transcript:

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. 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.

Income Statement

Activities and Activity Rates

First Stage Allocation

Activity Rates

Second Stage Allocation

Product Costing

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