Answer: Please find answers in the explanation column
Explanation: Given
Products Sales Revenue Traditional ABC
Product 540X 198,200 54,440 45,520
Product 137Y 158,700 49,090 39,290
Product 249S 83,190 11,290 30,010
a) computing operating income using the traditional costing system for each product.
1) Product 540X
Operating income = Revenues - Operating cost
198,200 - 54,440= $143,760
2)) Product 137Y
Operating income = Revenues - Operating cost
158,700 - 49,090= $109,610
3) Product 249S
Operating income = Revenues - Operating cost
83,190 - 11,290 = $71,900
b) computing operating income using the activity-based costing system for each product.
1) Product 540X
Operating income = Revenues - Operating cost
198,200 - 45,520= $152,680
2)) Product 137Y
Operating income = Revenues - Operating cost
158,700 - 39,290= $119,410
3) Product 249S
Operating income = Revenues - Operating cost
83,190 - 30,010 = $53,180
c) Using the following formula, computing the percentage difference in operating income for each of the product lines of Sunland
PProduct 540X ={Operating Income (ABC)-Operating Income traditional cost)]divided operating Income (traditional cost)
= ($152,680 -$143,760)/$143,760 X 100 =8,920/143760X 100= 6.20%
Product 137Y ={Operating Income (ABC)-Operating Income traditional cost)]divided operating Income (traditional cost)
= ( $119,410 -$109,610)/$109,610 X 100 =9800/109610 X100= 8.94%
Product 249S ={Operating Income (ABC)-Operating Income traditional cost)]divided operating Income (traditional cost)
= ( $53,180-$71,900)/$71,900 X 100 =-18,720/71900X 100
= -26.04%
