Respuesta :
Answer:
(a) We have:
Product 540X operating income = $143,000
Product 137Y operating income = $120,000
Product 249S operating income = $67,000
(b) We have:
Product 540X operating income = $156,000
Product 137Y operating income = $131,000
Product 249S operating income = $42,900
Explanation:
Note: This question is not complete as there are two requirements. The two requirements are therefore provided before answering the question as follows:
Collapse question part (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.
The explanation of the answers is now given as follows:
(a) For each product line, compute operating income using the traditional costing system
Operating income = Sales revenue - Traditional …………………. (1)
Using equation (1), we have:
Product 540X operating income = $202,000 - $59,000 = $143,000
Product 137Y operating income = $172,000 - $52,000 = $120,000
Product 249S operating income = $84,000 - $17,000 = $67,000
(b) For each product line, compute operating income using the activity-based costing system.
Operating income = Sales revenue - ABC …………………. (2)
Using equation (3), we have:
Product 540X operating income = $202,000 - $45,900 = $156,000
Product 137Y operating income = $172,000 - $41,000 = $131,000
Product 249S operating income = $84,000 - $41,100 = $42,900
