Question

Perdon Inc. has conducted the following analysis related to its product lines using a traditional costing system (volume-based) and an activity-based costing system. Both the traditional and the activity-based costing systems include direct materials and direct labour costs.

		Total Costs
Products	Sales Revenue	Traditional	ABC
Product 440X	$200,000	$80,000	$45,000
Product 137Y	190,000	60,000	65,000
Product 249S	80,000	30,000	55,000

Please complete the following questions as per the instructions provided.

(a) Operating Income under Traditional Costing:
Product 440X $_______
Product 137Y $_______
Product 249S $_______

(b) Operating Income under Activity-Based Costing:
Product 440X $______
Product 137Y $______
Product 249S $______

(c) Find the percentage change between traditional and activity-based costing for each product:
Product 440X ______%
Product 137Y ______%
Product 249S ______%

Answer 1