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    Assignment 5 SCM

    Uploaded by

    Ilagan, Josie M.

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    © All Rights Reserved
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    Assignment 5 SCM

    Uploaded by

    Ilagan, Josie M.
    23 views3 pages

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    assignment 5 SCM

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    23 views3 pages

    Assignment 5 SCM

    Uploaded by

    Ilagan, Josie M.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    ASSIGNMENT #5

    Problem 5.1)
    1) Predetermined annual overhead rates for Activity-based costing.
    Materials handling 400,000 ÷ 50,000 kilos = ₱8 per kilo
    Production set ups 900,000 ÷ 300 runs = ₱3,000 per run
    Quality inspection 800,000 ÷ 4,000 hours = ₱200 per hour
    Machine depreciation 400,000 ÷ 10,000 hours = ₱4 per hour

    2) Overhead costs assigned to Model A and Model B using activity-


    based costing.

    Model A Model B
    Materials handling (₱8 × no. of kilos) 7,200 25,600
    Production set ups (₱3,000 × no. of 27,000 45,000
    runs)
    Quality inspection (₱200 × inspection 16,000 24,000
    hours)
    Machine depreciation (₱4 × machine 1,120 2,020
    hours)
    Allocated overhead cost 51,320 96,620

    3) Cost per unit of Model A and Model B using the activity-based


    costing.

    Model A Model B
    Direct Materials (cost/ unit × units 180,000 480,000
    produced)
    Direct Labor (cost/ unit ÷ units 40,500 120,000
    produced)
    Overhead 51,320 96,620
    Total Manufacturing Cost 271,820 696,620
    ÷ units produced 450 units 800 units
    Cost per unit ₱604.04 ₱870.76

    4) Cost per unit of Model A and Model B using the traditional approach.

    Model A Model B
    Direct Materials (cost/ unit × units 180,000 480,000
    produced)
    Direct Labor (cost/ unit ÷ units 40,500 120,000
    produced)
    Overhead (100% of direct labor cost) 40,500 120,000
    Total Manufacturing Cost 261,000 720,000
    ÷ units produced 450 units 800 units
    Cost per unit ₱580 ₱900

    1|Page
    Problem 5.4)
    1) Unit cost and gross margin using ABC

    Per unit
    (/
    Total
    20,000uni
    ts)
    Direct Material ₱ 500,000 ₱25.00
    Direct Labor 100,000 5.00
    Factory Overhead:
    Quality (8,000,000/100,000) 1,200 96,000
    Production Scheduling 4,000
    (500,000/5,000) 40
    Set up (6,000,000/5,000) 40 48,000
    Shipping (3,000,000/60,000) 100 5,000
    Shipping Administration 2,500
    (500,000/10,000) 50
    Production (15,000,000/100,000) 22,500 178,000 8.90
    150
    Total Cost ₱778,000 P38.90
    Offered Sales Price 75.00
    Gross Margin ₱36.10
    Gross Margin Percentage 48.13%

    2) I would recommend to use the activity based costing as it would result to a


    lower cost, thus producing a higher gross margin percentage than using
    traditional costing, with a difference of ₱11.10 (₱36.10 - ₱25) gross margin
    per unit.

    Problem 5.6)

    Personnel Inspection Casting Finishing


    No. of inspections 3,200 2,800
    No. of employees 10 20 80 60

    Cost 160,000 100,000 160,000 60,000


    Personnel cost (160,000)
    allocation:
    160,000 × 20/160 20,000
    160,000 × 80/160 80,000
    160,000 × 60/160 60,000

    2|Page
    - 120,000 240,000 120,000
    Inspection cost (120,000)
    allocation:
    120,000 × 64,000
    3,200/6,000
    120,000 × 56,000
    2,800/6,000
    Total Costs after - - ₱304,000 ₱176,000
    allocation

    Problem 5.8)

    Overhead rates
    Expected use of
    Activity Cost (Est. overhead ÷
    Est. Overhead cost driver per
    Pool Exp. Use of cost
    activity
    driver)
    Cutting 900,000 24,000 labor hours ₱37.50/ labor hour
    Stitching 8,000,000 320,000 machine ₱25/ machine hour
    hours
    Inspections 2,800,000 160,000 labor hours ₱17.50/ labor hour
    Packing 672,000 64,000 FG units ₱10.50/ FG units

    3|Page

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