Professional Documents
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ACTIVITY-BASED COSTING
Questions 116 thru 120 are based on the following information. Horngren
Munoz, Inc. produces a special line of plastic toy racing cars. Munoz, Inc. produces the cars in batches. To
manufacture a batch of the cars, Munoz, Inc. must set up the machines and molds. Setup costs are batch-level costs
because they are associated with batches rather than individual units of products. A separate Setup Department is
responsible for setting up machines and molds for different styles of car.
Setup overhead costs consist of some costs that are variable and some costs that are fixed with respect to the
number of setup-hours. The following information pertains to June 2004.
Actual Amounts Static-budget Amounts
Units produced and sold 15,000 11,250
Batch size (number of units per batch) 250 225
Setup-hours per batch 5 5.25
Variable overhead cost per setup-hour $40 $38
Total fixed setup overhead costs $14,400 $14,000
Questions 51 thru 53 are based on the following information. Horngren
Bates Corporation used the following data to evaluate their current operating system. The company sells items for
$10 each and used a budgeted selling price of $10 per unit.
Actual Budgeted
Units sold 495,000 units 500,000 units
Variable costs $1,250,000 $1,500,000
Fixed costs $ 925,000 $ 900,000
Based on normal capacity operations, Sta. Ana Company employs 25 workers in its
Refining Department, working 8 hours a day, 20 days per month at a wage rate of P6 per
hour. At normal capacity, production in the department is 5,000 units per month. Indirect
materials average P0.25 per direct labor hour; indirect labor cost is 12½% of direct labor cost;