The Pangasinan plant of the Pilipinas Company manufactures cash registers. It plansto implement an activity-based costing system. The controller has prepared thefollowing estimates regarding cost pools and activity levels for the next year.Cost PoolActivity CostsActivity driver levelsElectricityP100,00040,000 kwhMachine setups300,0001,500 setup hoursMaterial moves80,00040,000 movesQuality inspections120,00030,000 inspectionsTotalP600,000The plant’s present cost accounting system allocates manufacturing overhead to jobs using aplant-wide overhead rate based on machine hours. The total machine hours for the comingyear are estimated to be 100,000 hours.The company has received a request for a bid to deliver 2,000 units of its cash register modelMAI. The following estimates pertain to the production of 2,000 units of MAI:Direct materials costP30,000Direct labor (P10/hour)P15,000Machine hours2,000Setup hours50Electricity (Kwh)2.000Number of quality inspections500Number of material moves200What are the estimated manufacturing costs per unit of MAI if the activity-based costingsystem is implemented?A. P22.50B. P31.20C. P28.50D. P26.8

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
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Problem 38P: Friendly Bank is attempting to determine the cost behavior of its small business lending operations....
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The Pangasinan plant of the Pilipinas Company manufactures cash registers. It plansto implement an activity-based costing system. The controller has prepared thefollowing estimates regarding cost pools and activity levels for the next year.Cost PoolActivity CostsActivity driver levelsElectricityP100,00040,000 kwhMachine setups300,0001,500 setup hoursMaterial moves80,00040,000 movesQuality inspections120,00030,000 inspectionsTotalP600,000The plant’s present cost accounting system allocates manufacturing overhead to jobs using aplant-wide overhead rate based on machine hours. The total machine hours for the comingyear are estimated to be 100,000 hours.The company has received a request for a bid to deliver 2,000 units of its cash register modelMAI. The following estimates pertain to the production of 2,000 units of MAI:Direct materials costP30,000Direct labor (P10/hour)P15,000Machine hours2,000Setup hours50Electricity (Kwh)2.000Number of quality inspections500Number of material moves200What are the estimated manufacturing costs per unit of MAI if the activity-based costingsystem is implemented?A. P22.50B. P31.20C. P28.50D. P26.8
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