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stich3 [128]
3 years ago
12

Ayala 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 labor costs Total Costs
Products Sales Revenue Traditional ABC
Product 540X $201,000 $56,000 $45,600
Product 137Y 159,000 55,000 25,000
Product 249S 89,000 15,000 55,400
Required:
1. For each product line, compute operating income using the traditional costing system
2. Compute operating income using the activity-based costing system
Business
1 answer:
GalinKa [24]3 years ago
7 0

Answer:

1) Part 1. Operating Income = Revenue - Operating cost

=201,000 - 56,000

=$145,000

Part 2.  Operating Income = Revenue - Operating cost

= 159,000 - 55,000

= $104,000

Part 3. Operating Income = Revenue - Operating cost

= 89,000 - 15,000

=$74,000

2. Part 1. Operating Income = Revenue - Operating cost

=201,000 - 45,600

=$155,400

Part 2. Operating Income = Revenue - Operating cost

=159,000 - 25,000

=$134,000

Part 3. Operating Income = Revenue - Operating cost

=89,000 - 55,400

=$33,600

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Initially the bond's price is equal to its par value which means the coupon rate on bond and the market interest rates are the same i.e. 6%.

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As the bond is a semiannual bond, we will use the semi annual coupon payment, the semi annual percentage of the annual rate of interest on market and the number of semi annual periods outstanding.

Semi annual coupon payment = 1000 * 0.06 * 6/12 = $30

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New market interest rate = 6 + 1 = 7% annual

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Answer:

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