Problem 1

Activity Driver Scented Cards

Inspection hours 0.6
Setup hours 0.7
Machine hours 0.25
No. of moves 0.8

2 Because of different ratio I can say that there is a product diversity. Going back on table, we can see that
the cost in scented cards is understated by 25% while the regular cards is overstated by 75%.

3. Inspection products P45,000/1800=

Setting up equipment P28,500/600=
Machining P30,720/3840=
Moving materials P16,200/3600=

4 P45,000 x 20=

Problem 2
1 3,000,000/540,000 =
2 375,000/135,000=

Problem 3
1. a. P432,000/8000=
b. P1,440,000/9600=

2 6400 x P54=
1600 x P150=

3 P585,600/8000=
4 P1,872,000/9600=
5 1600 x 195=
6. Within the two system, fudge is unique as it wants its activity rate to get the totatlity of the assigned
fudge.

Problem 4
1 Normal
1,280,000
1,200,000
3,200,000
 900,000
6,580,000

2 P6,580,000/8000=
P24,800,000/6400=

3 31,380,000/14,400=

Problem 5
2,500,000 x 3=

Activity % time on each activity

Unloading 0.4
Counting 0.25
Inspecting 0.35

Activity Unloading
Forklift Unloading 750,000
Fuel 180,000
Maintenance 75,000
Salary 3,000,000
4,005,000

Problem 6
1 REVENUE
JIT Distributor 700 x 750= 525,000 x 150=
Non JIT Distributor 70 x 7500= 525,000 x 150=
Customer cost allocated 5,250,000 x 50%=

2 Activity Rate
3,080,000/770= 4,000
1,120,000/140= 8,000
1,050,000/525= 2,000
3. I'll make the assumption that transaction cost are too high. What I am to advised is that the distributors should or
amount to reduce the cost incurred per order.

Problem 7
Manzer Inc.
Units Purchase Price 71,200,000
Sampling hours 9,600
Rework Hours 365,040
Warranty Hours 480,000
Total Costs 72,054,640
Units 800,000
Unit Cost P90.07

Cost of Loss of Sales

Manzer 4,000,000 x 5%= 200,000
Buckner 4,000,000 x 95%= 3,800,000

Based on the req 1 and 2, the importantce of activity based costing is that we can see w
lesser total cost and unit cost.
 Problem 1
Regular Cards
0.4
0.3
0.75
0.2

t diversity. Going back on table, we can see that

regular cards is overstated by 75%.

P25 per inspection hour

P47.50 per setting up equipment hour
P8 per machining hour
P4.50 moving materials per hour

P900,000

Problem 2
P5.56
P2.78

Problem 3
P54
P150

345,600
240,000
585,600

P73.20
P195
312,000
tivity rate to get the totatlity of the assigned

Problem 4
Intensive
1,600,000
4,400,000
8,000,000
 10,800,000
24,800,000

P822.50
P3875

P2,179.17

Problem 5
7,500,000

3,000,000
1,875,000
2,625,000

Counting Inspecting
60,000

37,500
1,875,000 2,625,000
1,875,000 2,722,500

Problem 6

7,875,000
7,875,000
2,625,000

Allocated to JIT Allocated to non JIT

2,800,000 280,000
560,000 560,000
700,000 350,000
gh. What I am to advised is that the distributors should order the maximum

Problem 7
Buckner Company
275,200,000
470,400
5,718,960
 9,120,000
290,509,360
3,200,000
P90.78

New Total Cost New Unit Cost Change

72,054,640 P90.32 0.25
290,509,360 P91.97 1.19

of activity based costing is that we can see which is the

Increase
Increase