Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow: Sales are budgeted at $357,000 for November, $327,000 for December, and $307,000 for January.
Collections are expected to be 80% in the month of sale and 20% in the month following the sale.
The cost of goods sold is 70% of sales.
The company desires to have an ending merchandise inventory equal to 70% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
Other monthly expenses to be paid in cash are $25,400.
Monthly depreciation is $17,400.
Ignore taxes.
Balance Sheet
October 31
Assets
Cash $ 21,100
Accounts receivable 78,400
Inventory 174,930
Property, plant and equipment, net of $505,500 accumulated depreciation 1,009,000
Total assets $ 1,283,430
Liabilities and Stockholders’ Equity
Accounts payable $ 275,500
Common stock 787,000
Retained earnings 220,930
Total liabilities and stockholders’ equity $ 1,283,430
The net income for December would be:.

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?