Activity	Allocation Base	Budgeted Overhead	Budgeted Use for each activity
set-up	direct labor hours	$157,500	10,500 direct labor hours
Forming	machine-hours	$187,500	75,000 machine hours
machine maintenance	batches	$84,000	140 batches
inspection	units produced	$21,000	70,000 units
total manufacturing overhead		$450,000

Would operating income increase or decrease (given the same facts in transactions 1 through 11 above) if Gordon used activities-based costing for allocating overhead? By how much?

What conclusions might Gordon Companys management accountants draw once they compared the original income statement with the ABC-based income statement?