a Corp. has used a traditional cost accounting system to apply quality control costs uniformly to all products at a rate of P20 per direct labor hour. The average monthly direct labor hours for its main product are 28,800 hours. T Formeloza Corp. wants to shift to ABC system in order to allocate quality control costs to its products in a more equitable manner. To start with, process value analysis was conducted. Quality control activities were determined, as well as the appropriate cost drivers and cost driver rates. The analysis yielded the following: Quantity for Main Product 40 classes Activity Cost Driver Rate Inspection of materials deliveries Inspection of goods in process Final inspection before delivery of finished goods Classes of materials P500 per class Number of units 10 per unit 24,000 units Nu
T Formeloza Corp. has used a traditional cost accounting system to apply quality control costs uniformly to all products at a rate of P20 per direct labor hour. The average monthly direct labor hours for its main product are 28,800 hours. T Formeloza Corp. wants to shift to ABC system in order to allocate quality control costs to its products in a more equitable manner. To start with, process value analysis was conducted. Quality control activities were determined, as well as the appropriate cost drivers and cost driver rates. The analysis yielded the following: Quantity for Main Product 40 classes Activity Cost Driver Rate Inspection of materials deliveries Inspection of goods in process Final inspection before delivery of finished goods Classes of materials P500 per class Number of units 10 per unit 24,000 units Number of orders 200 per order 200 orders The quality control cost that would be assigned to the main product using the traditional costing system is а. Р576,000 ь. Р720,000 с. Р450.000 d. P360,000
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