A company has identified the following overhead costs and cost drivers for the coming year. Overhead item Cost driver Budgeted Activity Budgeted Overhead Machine set – up Number of sets – up 200 P 20,000 Inspection Number of inspections 6,500 P130,000 Material handling Number of materials moves 8,000 P 80,000 Engineering Number of engineering hours 1,000 P 50,000 Total P 280,000 The following information was collected on three jobs that were completed during the year: Job 101 Job 102 Job 103 Direct materials P 5,000 P 12,000 P 8,000 Direct labor 2,000 2,000 4,000 Units completed 100 50 200 Number of set ups 1 2 4 Number of materials moves 30 10 50 Number of engineering hours 10 50 10 Budgeted direct labor cost was P 100,000 and budgeted direct material cost was P 280,000. If the company uses ACTIVITY BASED COSTING, how much overhead cost should be assigned to Job 103? P 1,300 P 2,000 P 5,000 P 5,600
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
A company has identified the following
Overhead item Cost driver Budgeted Activity Budgeted Overhead
Machine set – up Number of sets – up 200 P 20,000
Inspection Number of inspections 6,500 P130,000
Material handling Number of materials moves 8,000 P 80,000
Engineering Number of engineering hours 1,000 P 50,000
Total P 280,000
The following information was collected on three jobs that were completed during the year:
Job 101 Job 102 Job 103
Direct materials P 5,000 P 12,000 P 8,000
Direct labor 2,000 2,000 4,000
Units completed 100 50 200
Number of set ups 1 2 4
Number of materials moves 30 10 50
Number of engineering hours 10 50 10
Budgeted direct labor cost was P 100,000 and budgeted direct material cost was P 280,000.
If the company uses ACTIVITY BASED COSTING, how much overhead cost should be assigned to Job 103?
P 1,300
P 2,000
P 5,000
P 5,600
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