Ayala Inc. has conducted the following analysis related to its product lines, using a traditional costing system
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Instructions
(a) For each product line, compute operating income using the traditional costing system.
(b) For each product line, compute operating income using the activity-based costing system.
(c) 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 the percentage to two decimals.)
(d) Provide a rationale as to why the costs for Product 540X are approximately the same using either the traditional or activity-based costingsystem.
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Related Book For
Accounting Tools for business decision making
ISBN: 978-0470095461
4th Edition
Authors: kimmel, weygandt, kieso
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