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 Costing ……………………………………………ABC
Sales revenue …………………………………………….$600,000……………………………………………… $600,000
Overhead costs:
Product RX3 …………………………………………………$34,000 ………………………………………………..$50,000
Product Y12 …………………………………………………+$36,000 ………………………………………………+$20.000
………………………………………………………………….. $70,000 ………………………………………………. $70,000
Explain how a difference in the overhead costs between the two systems may have occurred.