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yala Inc. has conducted the following analysis related to its product lines, using a Explain difference between traditional and activity-based costing. traditional costing system (volume-based)
yala Inc. has conducted the following analysis related to its product lines, using a Explain difference between traditional and activity-based costing. traditional costing system (volume-based) and an activity-based costing system. The traditional and the activity-based costing systems assign the same amount of direct materials and direct labor costs. 4-34 CHAPTER 4 Activity-Based Costing Total Costs Products Product 540X Product 137Y Product 249S Sales Revenue $180,000 160,000 70,000 Traditional 55,000 50,000 15,000 A BC $50,000 35,000 35,000 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 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
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