Question

PROBLEM 1

AAA Company produces two products in a single factory. The following production and cost information has been determined.

	Model 1	Model 2
Units produced	1,000	200
Direct labor hours per unit	1	5
Material moves (total)	100	40
Testing time (total)	250	125

The controller has determined total overhead to be P480,000. P140,000 relates to material moves; P150,000 relates to testing; the remainder is related to labor time. DDD uses direct labor hours to allocate overhead to each model.

Compute:

1. Using traditional costing, compute for the total cost and cost per unit of:
   1. Model 1 (2 pts)
   2. Model 2 (2 pts)
2. Using activity-based costing, compute for total cost and per-unit cost of:
   1. Model 1 (2 pts)
   2. Model 2 (2 pts)

PROBLEM 2

BBB Company plans to use activity-based costing to assign hospital indirect costs to the care of patients. The hospital has identified the following activities and activity rates for the hospital’s indirect costs:

Activity	Activity Rate
Room and meals	P150 per day
Radiology	P95 per image
Pharmacy	P20 per physician order
Chemistry lab	P85 per test
Operating room	P550 per operating room hour

The records of two representatives were analyzed, using the activity rates. The activity information associated with the two patients is as follows:

	Patient X	Patient Y
No. of days	7	3
No. of images	4	2
No. of physician orders	5	1

No. of tests	6	2
No. of operating room hours	4.5	1

Determine the total activity cost associated with:

1. Patient X (2 pts)
2. Patient Y (2 pts)

Answer 1