Assignment # 3

ACTIVITY BASED COSTING

Assignment #1. Johnny de la Cruz Company uses activity-based costing. The company has two
products: A and B. The annual production and sales of Product A is 5,000 units and of Product B
is 2,000 units. There are three activity cost pools, with estimated total cost and expected activity
as follows:

Estimated Expected Activity

Activity Cost Pools Overhead Cost Product A Product B Total
Activity 1 P 24,000 200 800 1,000
Activity 2 P 36,900 750 150 900
Activity 3 P 63,000 1,000 800 1,800

Required: Determine the overhead cost per unit of Product A under activity-based costing.

Assignment #2. Baker Express Inc., manufactures and sells two products: Product N0 and
Product U8. Data concerning the expected production of each product and the expected total
direct labor-hours (DLHs) required to produce that output appear below:

Direct Labor-
Expected Hours Per Total Direct
Production Unit Labor-Hours
Product N0 1,000 6.0 6,000
Product U8 200 9.0 1,800
Total direct labor-hours 7,800

The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:

Estimated Expected Activity

Activity Cost Overhead
Pools Activity Measures Cost Product N0 Product U8 Total
Labor-related DLHs P 170,664 6,000 1,800 7,800
Machine setups setups 59,040 400 500 900
Order size MHs 252,648 3,400 3,200 6,600
P 482,352

Required: Compute for the total overhead applied to Product U8 under activity-based costing.
Assignment #3. Harley, Inc., manufactures and sells two products: Product Q9 and Product F0.
Data concerning the expected production of each product and the expected total direct labor-
hours (DLHs) required to produce that output appear below:

Expected Direct Labor- Total Direct

Production Hours Per Unit Labor-Hours
Product Q9 800 8.0 6,400
Product F0 800 6.0 4,800
Total direct labor-hours 11,200

The direct labor rate is P21.80 per DLH. The direct materials cost per unit for each product is
given below:

Direct Materials
Cost per Unit
Product Q9 P174.90
Product F0 P146.70

The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:

Estimated Expected Activity

Activity Cost Overhead
Pools Activity Measures Cost Product Q9 Product F0 Total
Labor-related DLHs P 379,680 6,400 4,800 11,200
Machine setups setups 43,830 300 200 500
Order size MHs 284,700 3,100 2,900 6,000
P 708,210

Required: Determine the unit product cost of Product F0 under activity-based costing.

Assignment #4. Kraft Korner Inc., manufactures and sells two products: Product T4 and Product
F9. The company has an activity-based costing system with the following activity cost pools,
activity measures, and expected activity:

Estimated Expected Activity

Activity Cost Overhead
Pools Activity Measures Cost Product T4 Product F9 Total
Labor-related DLHs P 326,650 4,500 4,900 9,400
Product testing tests 68,572 600 800 1,400
Order size MHs 79,690 3,200 3,300 6,500
P 474,912

Required: Ascertain the total overhead applied to Product T4 under activity-based costing.
Assignment #5. Jordan Smash, Inc., manufactures and sells two products: Product N0 and
Product A8. Data concerning the expected production of each product and the expected total
direct labor-hours (DLHs) required to produce that output appear below:

Expected Direct Labor- Total Direct

Production Hours Per Unit Labor-Hours
Product N0 400 6.0 2,400
Product A8 100 4.0 400
Total direct labor-hours 2,800

The direct labor rate is P16.50 per DLH. The direct materials cost per unit for each product is
given below:

Direct Materials
Cost per Unit
Product N0 P288.50
Product A8 P232.70

The company is considering adopting an activity-based costing system with the following
activity cost pools, activity measures, and expected activity:

Estimated Expected Activity

Activity Cost Overhead
Pools Activity Measures Cost Product N0 Product A8 Total
Labor-related DLHs P 77,448 2,400 400 2,800
Machine setups setups 28,064 300 500 800
Order size MHs 359,134 4,000 3,900 7,900
P 464,646

Required; What is the unit product cost of Product N0 under activity-based costing?