Please answer question E4-3 and E4-8

vity-Based Costing Instructions For each product line, compute operating income using the traditional costing system. (b) each line, income the activity-based costing income Using the following formula, compute the percentage for each of the product lines of Ayala: operating Income (ABC) ating (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 costing system. American Fabrics has budgeted overhead costs of $990,000. It has allocated over d ABC head on a to its two products (wool and cotton) direct labor hours which are estimated to be 450,000 for the current year. The company has decided to ex- periment with activity-based costing and has created two activity and related activity cost drivers. These two cost pools are: cutting machine hours) an design (cost driver is number of overhead allocated to the cost pool is $360,000 and $630,000 is allocated to the design cost Additional information related to these pools is as follows. Wool Cotton Total 100,000 100,000 200,000 Machine hours 1,500 500 1,000 Number of setups f nunrhead allocated to the wool product line and the cotto Instructions vity-Based Costing Instructions For each product line, compute operating income using the traditional costing system. (b) each line, income the activity-based costing income Using the following formula, compute the percentage for each of the product lines of Ayala: operating Income (ABC) ating (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 costing system. American Fabrics has budgeted overhead costs of $990,000. It has allocated over d ABC head on a to its two products (wool and cotton) direct labor hours which are estimated to be 450,000 for the current year. The company has decided to ex- periment with activity-based costing and has created two activity and related activity cost drivers. These two cost pools are: cutting machine hours) an design (cost driver is number of overhead allocated to the cost pool is $360,000 and $630,000 is allocated to the design cost Additional information related to these pools is as follows. Wool Cotton Total 100,000 100,000 200,000 Machine hours 1,500 500 1,000 Number of setups f nunrhead allocated to the wool product line and the cotto Instructions