Activity-Based Costing (ABC) 6. Jose Company specializes in the production of two types of products, the A-1 and the B-3. The A-1 has been a bread-and-butter product for a number of years, while the B-3 is relatively new and struggling to gain public acceptance. Data on the two products follow: 291 Product A-1 Product B-3 Material cost Labor hours P20 P45 Expected volume for coming year 10 hours 20 hours 10,000 500 Labor cost is P20 per hour and overhead costs are budgeted at P660,000 for the coming year. For purposes of using the ABC system, the controller develops the following information: Product A-1 Product B-3 100 250 Number of machine setups, annually Testing time, annually 2,000 hours 2,750 hours Thus, the company performs one setup for every 10 units of A-1 (100/ 10,000) and one setup for every two units of B-3 (250/500). Similarly, the company spends 0.20 hours (2,000/10,000) testing an A-1 and 5.5 hours (2,750/500) testing a B-3. The controller also determined that of the total overhead of P660,000. about P140,000 is related to setups and P190,000 to testing. The remaining P330,000 is related to labor.

Activity-Based Costing (ABC) 6. Jose Company specializes in the production of two types of products, the A-1 and the B-3. The A-1 has been a bread-and-butter product for a number of years, while the B-3 is relatively new and struggling to gain public acceptance. Data on the two products follow: 291 Product A-1 Product B-3 Material cost Labor hours P20 P45 Expected volume for coming year 10 hours 20 hours 10,000 500 Labor cost is P20 per hour and overhead costs are budgeted at P660,000 for the coming year. For purposes of using the ABC system, the controller develops the following information: Product A-1 Product B-3 100 250 Number of machine setups, annually Testing time, annually 2,000 hours 2,750 hours Thus, the company performs one setup for every 10 units of A-1 (100/ 10,000) and one setup for every two units of B-3 (250/500). Similarly, the company spends 0.20 hours (2,000/10,000) testing an A-1 and 5.5 hours (2,750/500) testing a B-3. The controller also determined that of the total overhead of P660,000. about P140,000 is related to setups and P190,000 to testing. The remaining P330,000 is related to labor.

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Description: Activity-Based Costing (ABC)6. Jose Company specializes in the production of two types of products,the A-1 and the B-3. The A-1 has been a bread-and-butter product fora number of years, while the B-3 is relatively new and struggling togain public ac

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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