Operating income using Traditional costing system Operating income using activit
ID: 372910 • Letter: O
Question
Operating income using Traditional costing system
Operating income using activity based costing system
Percentage difference in the operating income = Operating income of ABC - Operating income of Traditional costing / operating income of traditional costing
Product 540X = 166,900 - 154,000 / 154,000 = 0.08%
Product 137Y = 139,000 - 166,000 / 166,000 = (-)0.16%
Product 249S = 35,100 - 71,000 / 71,000 = (-)0.50%
Products Sales revenue ($) Traditional ($) operating cost ($) = Sales - Traditional 540X 212,000 58,000 154,000 137Y 170,000 4,000 166,000 249S 85,000 14,000 71,000Explanation / Answer
Exercise 16-2 Ayala Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and an activity-based costing system. Both the traditional and the activity-based costing systems include direct materials and direct labor costs Total Costs Sales Revenue Products Product S40X Product 137Y Product 249S Traditional ABC 212,000 170,000 85,000 $58,000 $45,100 54,000 31,000 14,000 49,900 For each product line, compute operating income using the traditional costing system Product 540X Product 137Y Product 249S For each product line, compute operating income using the activity-based costing system Product 540X Product 137Y Product 249S Using the following formula, compute the percentage difference in operating income for each of the product lines of Ayala: [Operating Income (ABC) Operating Income (traditional cost)) ÷ Operating Income (traditional cost). (Round answers to 2 decimal places, eg. 12.25. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Product 540 Product 137Y Product 249S
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