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You prepare two types of financial statements that show operating profit for two toys your company manufactures. Under the activity based costing approach toy B

You prepare two types of financial statements that show operating profit for two toys your company manufactures. Under the activity based costing approach toy B is less profitable than toy A. When you prepare financial statements using direct labor costs to allocate overhead costs both toys (A and B) are profitable.

You believe that when management sees the ABC costing results the company will probably quit making toy B. You have friends working on the production and marketing of toy B and they would lose their jobs

Should you show the ABC based report to management? Why?

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