2. Problem 8-5: Computation of Selling Price using Traditional Costing and ABC Systems. CPA Manufacturing Company identified the following overhead costs and cost drivers for the coming year: Budgeted Activity Level Activity Center Cost Driver Budgeted Cost Machine setup Inspection Material handling No. of material moves Engineering No. of setups No. of inspections P20,000 6,500 80,000 Engineering hours The following information was gathered on three jobs that were expected to be completed in the coming year: Job 1001 Job 2002 Job 3003 Direct materials Direct labor Units completed Number of setups Number of inspections Number of material moves P12,000 P 2,000 8. 22 14 15 30 40 Engineering hours 25 15 For the past several years, the company assigned overhead costs to products based on direct labor costs. For the coming year, the budgeted direct labor cost was P100,000 and budgeted direct material cost was P280,000. The company operates in a competitive market and sets product selling prices at cost plus 50% mark-up. Required: Using the current allocation system, determine the total overhead 1. cost of Job 1001; total full cost per unit of Job 2002; and sales price per unit of Job 3003. If the appropriate cost drivers are used in assigning manufacturing overhead, compute the total overhead cost of Job 1001; total full cost per unit of Job 2002; and the sales price per unit of Job 3003.
2. Problem 8-5: Computation of Selling Price using Traditional Costing and ABC Systems. CPA Manufacturing Company identified the following overhead costs and cost drivers for the coming year: Budgeted Activity Level Activity Center Cost Driver Budgeted Cost Machine setup Inspection Material handling No. of material moves Engineering No. of setups No. of inspections P20,000 6,500 80,000 Engineering hours The following information was gathered on three jobs that were expected to be completed in the coming year: Job 1001 Job 2002 Job 3003 Direct materials Direct labor Units completed Number of setups Number of inspections Number of material moves P12,000 P 2,000 8. 22 14 15 30 40 Engineering hours 25 15 For the past several years, the company assigned overhead costs to products based on direct labor costs. For the coming year, the budgeted direct labor cost was P100,000 and budgeted direct material cost was P280,000. The company operates in a competitive market and sets product selling prices at cost plus 50% mark-up. Required: Using the current allocation system, determine the total overhead 1. cost of Job 1001; total full cost per unit of Job 2002; and sales price per unit of Job 3003. If the appropriate cost drivers are used in assigning manufacturing overhead, compute the total overhead cost of Job 1001; total full cost per unit of Job 2002; and the sales price per unit of Job 3003.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:2.
Problem 8-5: Computation of Selling Price using Traditional
Costing and ABC Systems.
CPA Manufacturing Company identified the following overhead costs and
cost drivers for the coming year:
Budgeted
Activity Level
Activity Center
Cost Driver
Budgeted Cost
Machine setup
Inspection
Material handling No. of material moves
Engineering
No. of setups
No. of inspections
P20,000
6,500
80,000
Engineering hours
The following information was gathered on three jobs that were expected
to be completed in the coming year:
Job 1001
Job 2002
Job 3003
Direct materials
Direct labor
Units completed
Number of setups
Number of inspections
Number of material moves
P12,000
P 2,000
8.
22
14
15
30
40
Engineering hours
25
15
For the past several years, the company assigned overhead costs to
products based on direct labor costs. For the coming year, the budgeted
direct labor cost was P100,000 and budgeted direct material cost was
P280,000. The company operates in a competitive market and sets product
selling prices at cost plus 50% mark-up.
Required:
Using the current allocation system, determine the total overhead
1.
cost of Job 1001; total full cost per unit of Job 2002; and sales price
per unit of Job 3003.
If the appropriate cost drivers are used in assigning manufacturing
overhead, compute the total overhead cost of Job 1001; total full cost
per unit of Job 2002; and the sales price per unit of Job 3003.
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