Problem 6. The Accountant of Camera Film Company has established the following activity cost of pools and cost drivers: Activity Budgete Cost driver Budgeted level Pool rate он P200,000 P100,000 No. of set ups Weight of Raw Mat Weight of Hazardous chemical used Number of inspections 100 50,000 lbs. P2,000/set up Machine set ups Materials hand Hazardous waste control Quality control Other costs P2ib. P50,000 P75,000 overhead P200,000 Machine hours 10,000 lbs. PSAb. 1,000 20,000 hrs. P10m hr. P75inspection An order for 2,000 boxes of film development chemicals has the following production requirements: Machine set ups Raw materials Hazardous materials Inspections Machine hours 10,000 pounds 2,000 pounds 20 500 Direct manufacturing cost actually incurred to produce 2,000 boxes are Direct materials of P425,000 and direct labor of P400,000. Before the company adopts the ABC approach of costing, the traditional approach of allocating overhead, which is based on machine hours, is being used. Required a. Determine the amount of overhead applied to each box of chemical under ABC and traditional costing b. Determine the manufacturing cost per box under ABC and traditional method.
Problem 6. The Accountant of Camera Film Company has established the following activity cost of pools and cost drivers: Activity Budgete Cost driver Budgeted level Pool rate он P200,000 P100,000 No. of set ups Weight of Raw Mat Weight of Hazardous chemical used Number of inspections 100 50,000 lbs. P2,000/set up Machine set ups Materials hand Hazardous waste control Quality control Other costs P2ib. P50,000 P75,000 overhead P200,000 Machine hours 10,000 lbs. PSAb. 1,000 20,000 hrs. P10m hr. P75inspection An order for 2,000 boxes of film development chemicals has the following production requirements: Machine set ups Raw materials Hazardous materials Inspections Machine hours 10,000 pounds 2,000 pounds 20 500 Direct manufacturing cost actually incurred to produce 2,000 boxes are Direct materials of P425,000 and direct labor of P400,000. Before the company adopts the ABC approach of costing, the traditional approach of allocating overhead, which is based on machine hours, is being used. Required a. Determine the amount of overhead applied to each box of chemical under ABC and traditional costing b. Determine the manufacturing cost per box under ABC and traditional method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 6. The Accountant of Camera Film Company has established the following
activity cost of pools and cost drivers:
Budgete
Cost driver
Budgeted
level
Pool rate
Activity
OH
P200,000
P100,000
No. of set ups
Weight of Raw Mat
Weight of Hazardous
chemical used
P2,000/set up
P2b.
Machine set ups
100
50,000 lbs.
Materials hand
Hazardous waste
control
P50,000
P75,000
overhead P200,000 Machine hours
10,000 Ibs.
1,000
20,000 hrs. P10/m hr.
P5/b.
Number of inspections
Quality control
Other
P75inspection
costs
An order for 2,000 boxes of film development chemicals has the following production
requirements:
Machine set ups
Raw materials
Hazardous materials
Inspections
Machine hours
10,000 pounds
2,000 pounds
20
500
Direct manufacturing cost actually incurred to produce 2,000 boxes are Direct
materials of P425,000 and direct labor of P400,000.
Before the company adopts the ABC approach of costing, the traditional approach of
allocating overhead, which is based on machine hours, is being used.
Required.
a. Determine the amount of overhead applied to each box of chemical under ABC
and traditional costing
b. Determine the manufacturing cost per box under ABC and traditional method.
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