Hackers Corp

Subject:AccountingPrice:3.86 Bought14

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Hackers Corp. accumulated the following information for its products. A and B,

                                                                       Product A     Product B      Total

           Production volume                       2, 000             1, 000                      

           Total direct labor hours                5, 000             20, 000         25, 000

           Setup cost per bath                 P  1, 000             P 2, 000

           Bath size                                           100                            50       

Total set-up cost incurred        P20, 000           P 40,000       P60, 000

Direct labor hour per unit            2                                 1

A traditional costing system would allocate set-up costs on the basis of direct labor hours. An ABC system would trace costs by spreading the cost per batch over the units in a batch.

1. What is the set-up cost per unit of Product A under each costing system?

                                                                       Traditional                           ABC System

           a.                                                         P4.80                                   P10.00

           b.                                                            2.40                                    10.00

           c.                                                        40.00                                     200.00

           d.                                                             4.8                          20.00

A summary of the usage of the service department services by other service departments as well as by the two producing departments is as follows:

    Equipment          Building       Production Dept.

Serving Cost Center   Supervision  Maintenance     Occupancy     Dept. 1    Dept.2

Supervision             0                      10%                    5%               40%         45%

Equinpment maint.         0                       0                          0                45%        55%

Building occunpanny      10%                 10%                    0                35%         45%

Direct costs in the varius deprtments are as follows:

           Department                                     Direct Cost               Label

           Supervision                                      P  35,000                  S1

           Equipment maintenance                    30,000                  S2

           Building occupancy                            90,000                  S3

           Product Dept .No. 1                           350,000                  P1

2. If the direct method of allocation is used, how much of the supervision department's cost would be allocated to the building occupancy department?

(Start with Building occupancy, then Supervision)

           a. 0

           b. P 1, 750

           c. P 3, 500

           d. P 5, 250

3. If the direct method of allocation is used, how much of the equipment maintenance costs would be allocated to production department No. 1?

           a. 0

           b. P 13, 500

           c. P 16, 500

           d. P 30, 000

4. If the step method of allocation is used, how much would be allocated from supervision to production department No. 1

           a. P 14, 000

           b. P 16, 471

           c. P 17, 600

           d. P 18, 500

5. If the step method of allocation is used, how much would be allocated from supervision to building occupancy?

           a. 0

           b. P 1, 750

           c. P 2, 200

           d. P 2, 444