BOTE Inc. produces sustainable plastic bottles, The following tables show the detailed production budgets, volumes, costs, ABC cost drivers and the traditional volume-based costing (VBC) overhead allocation based on direct labor hours (overhead rate base). Production Data for the Year Plastic bottle Selling price 6.00 Budget units of production 20,000 Material cost per unit P 0.50 Direct labor hours per unit 0.05 Direct labor cost per hour P 5.00 quality inspections per unit 0.025 Machine hours per unit 0.3 Moves required per unit 4 Activity Conversion Costs for 20,000 units (Budgeted Overhead Cost) Indirect Cost Components Costs (Php) Cost Driver Total Depreciation on machinery 75,000 Machine hours 4,010 Quality and finishing 24,000 No of quality inspections 6,000 Material handling 30,000 No. of moves 63,848 Total Indirect Cost 129,000 The budgeted direct labor hours is 5,000 hrs for the P129,000 indirect cost (OH cost). What is the unit cost of the product using activity based costing on the overhead cost?
BOTE Inc. produces sustainable plastic bottles, The following tables show the detailed production budgets, volumes, costs, ABC cost drivers and the traditional volume-based costing (VBC) overhead allocation based on direct labor hours (overhead rate base).
Production Data for the Year
|
|
Plastic bottle |
|
Selling price |
6.00 |
|
Budget units of production |
20,000 |
|
Material cost per unit |
P 0.50 |
|
Direct labor hours per unit |
0.05 |
|
Direct labor cost per hour |
P 5.00 |
|
quality inspections per unit |
0.025 |
|
Machine hours per unit |
0.3 |
|
Moves required per unit |
4 |
Activity Conversion Costs for 20,000 units (Budgeted Overhead Cost)
|
Indirect Cost Components |
Costs (Php) |
Cost Driver |
Total |
|
|
75,000 |
Machine hours |
4,010 |
|
Quality and finishing |
24,000 |
No of quality inspections |
6,000 |
|
Material handling |
30,000 |
No. of moves |
63,848 |
|
Total Indirect Cost |
129,000 |
|
|
The budgeted direct labor hours is 5,000 hrs for the P129,000 indirect cost (OH cost).
What is the unit cost of the product using activity based costing on the overhead cost?
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