BE4-2
Finney Inc. has conducted an analysis of overhead costs related to one of its
product lines using a traditional costing system (volume-based) and an
activity-based costing system. Here are its results.
Traditional
CostingABC
Sales
revenue $600,000$600,000
Overhead
costs:
Product
RX3 $ 34,000$ 50,000
Product Y12 36,00020,000
$
70,000$ 70,000
Explain
how a difference in the overhead costs between the two systems may have
occurred.
TUTORIAL PREVIEW
Under ABC, overhead costs are shifted
from the high-volume products to the low-volume products. This shift results in
more accurate costing for two reasons:
File name BE4-2
Finney Inc.docx File type: docx PRICE: $5
