Believing that its traditional cost system may be providing misleading information, an entity is considering an activity-based costing approach. It now employs a full cost system and has been applying its manufacturing overhead on the basis of machine hours. The organization plans on using 50,000 direct labor hours and 30,000 machine hours in the coming year. The following data show the manufacturing overhead that is budgeted (SEE PICTURE BELOW): Cost sales and production data for one of the organization's product for the coming year are as follows (PRESENTED IN THE PICTURE BELOW): If the organization employs an activity-based costing system, the cost per unit for the product described for the coming year will be:* 4 Activity Material handling Cost Driver No. of parts handled No. of setups Machine hours |No. of batches Budgeted Activity Budgeted Cost P 720,000 P 315,000 P 540,000 P225,000 6,000,000 750 Setup costs Machining costs Quality Control 30,000 500 Cost, sales and production data for one of the organization's product for the coming year are as follows Prime costs: Direct material cost per unit Direct labor cost per unit 0.05 direct labor hour at P15/direct labor hour Total Prime cost P4.40 0.75 P5.15 Sales and production data: Expected sales Batch size Setups Total parts per finished unit Machine hours required 20,000 units 5,000 units 2 per batch 5 parts 80 machine hours per batch
Believing that its traditional cost system may be providing misleading information, an entity is considering an activity-based costing approach. It now employs a full cost system and has been applying its manufacturing overhead on the basis of machine hours. The organization plans on using 50,000 direct labor hours and 30,000 machine hours in the coming year. The following data show the manufacturing overhead that is budgeted (SEE PICTURE BELOW): Cost sales and production data for one of the organization's product for the coming year are as follows (PRESENTED IN THE PICTURE BELOW): If the organization employs an activity-based costing system, the cost per unit for the product described for the coming year will be:* 4 Activity Material handling Cost Driver No. of parts handled No. of setups Machine hours |No. of batches Budgeted Activity Budgeted Cost P 720,000 P 315,000 P 540,000 P225,000 6,000,000 750 Setup costs Machining costs Quality Control 30,000 500 Cost, sales and production data for one of the organization's product for the coming year are as follows Prime costs: Direct material cost per unit Direct labor cost per unit 0.05 direct labor hour at P15/direct labor hour Total Prime cost P4.40 0.75 P5.15 Sales and production data: Expected sales Batch size Setups Total parts per finished unit Machine hours required 20,000 units 5,000 units 2 per batch 5 parts 80 machine hours per batch
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
100%
QUESTION 29
Cost Accounting
Choose the answer from the choices
Transcribed Image Text:O a. P6.00
O b. P6.08
O C. P6.21
d. P6.30
O O
Transcribed Image Text:Believing that its traditional cost system may be providing misleading information, an entity is
considering an activity-based costing approach. It now employs a full cost system and has
been applying its manufacturing overhead on the basis of machine hours. The organization
plans on using 50,000 direct labor hours and 30,000 machine hours in the coming year. The
following data show the manufacturing overhead that is budgeted (SEE PICTURE BELOW):
Cost, sales and production data for one of the organization's product for the coming year are
as follows (PRESENTED IN THE PICTURE BELOW):
If the organization employs an activity-based costing system, the cost per unit for the product
described for the coming year will be: * G
Cost Driver
No. of parts
handled
No. of setups
Machine hours
No. of batches
Activity
Material handling
Budgeted Activity
Budgeted Cost
Setup costs
Machining costs
|Quality Control
6,000,000
750
30,000
500
P 720,000
P 315,000
P 540,000
P225,000
Cost, sales and production data for one of the organization's product for the coming year are
as follows:
Prime costs:
Direct material cost per unit
Direct labor cost per unit
0.05 direct labor hour at P15/direct labor hour
P 4.40
0.75
P5.15
Total Prime cost
Sales and production data:
Expected sales
Batch size
Setups
Total parts per finished unit
Machine hours required
20,000 units
5,000 units
2 per batch
5 parts
80 machine hours per batch
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