Exercise 17-2 Ayale Inc. has conducted the following analysis related to its pro

Question

Exercise 17-2 Ayale 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 540x Product 137 Product 249S Traditional ABC $200,000 169,000 80,000 56,000 $46,200 54,000 36,000 22,000 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 Produet 137Y Product 249S LINK TO TEXT Using the following ormu a compute the percentage difference in operating income or each o the product lines o Ayala Operating Income ABC -Operating Income traditional cost Operating Income traditiona cost Round answers to 2 decimal places, e.g. 12.25. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Product 540x Product 137Y Product 249S

Explanation / Answer

Calculation of operating Income using Traditional costing Product 540X 144000 (200000-56000) Product 137Y 115000 (169000-54000) Product 249Y 58000 (80000-22000) Calculation of operating Income using Activity costing Product 540X 153800 (200000-46200) Product 137Y 133000 (169000-36000) Product 249Y 30200 (80000-49800) Computation of percentage difference Product 540X 6.81 % Product 137Y 15.65 % Product 249Y -47.93 %

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