Shalom Company has identified an activity cost pool to which it has allocated estimated overhead of P1,920,000. It has determined the estimated use of cost drivers for that activity to be 160,000 inspections. Product 2A require 40,000 inspections, Product 28 30,000 inspections, and Product 3B, 90,000 inspections. Shalom Company uses direct labor hours to allocate the overhead in a traditional method. Direct labor hours for Products 2A, 2B, and 3B are 43,000, 67,000, and 82,000, respectively. Comparing traditional and activity-based methods of allocating overhead, indicate if the products were over or under cost. Use the underlined words in capital letters as your choice.

Shalom Company has identified an activity cost pool to which it has allocated estimated overhead of P1,920,000. It has determined the estimated use of cost drivers for that activity to be 160,000 inspections. Product 2A require 40,000 inspections, Product 28 30,000 inspections, and Product 3B, 90,000 inspections. Shalom Company uses direct labor hours to allocate the overhead in a traditional method. Direct labor hours for Products 2A, 2B, and 3B are 43,000, 67,000, and 82,000, respectively. Comparing traditional and activity-based methods of allocating overhead, indicate if the products were over or under cost. Use the underlined words in capital letters as your choice.

Name: Shalom Company has identified an activity cost pool to which it has a
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Description: Shalom Company has identified an activity cost pool to which it has allocated estimated overheadof P1,920,000. It has determined the estimated use of cost drivers for that activity to be 160,000inspections. Product 2A require 40,000 inspections, Pro

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 27E: Plata Company has identified the following overhead activities, costs, and activity drivers for the...

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