ES course Hero Search couse documents: Q, Expert Help StudyResourees » parade? «= QS G9 Weready! Rate the answer 00 8 Oo ®&®) Your question: Subject Cost Accounting Couse: ACCOUNTING 15, Shalom Company has budgeted overhead cost of P,200,00. it has allocated overhead on 3 plantinide basis to ts two produts (weal ond eaton) using eect labor hour, which are ‘estimated toe 400,00 for the curent yea. The company has decided to experiment with activity based costing and has created twa act cost pools and related activty cost ders. ‘These bo cost pools are cutting the cost erivr is machine hous) and design (he cast eriver i ‘the rumber of set-ups), Overhead allocated to the cutting cost pools PBDO,000 and P40, 000, allocated to the desin cost poo Additional information relate to these pool ia follows: ‘Wool Coton Machinehours 100,000 100,000 Number of setups 800200, “Amounts mas bein whole mmibers. Example: 8,000 or 88,000) ‘Unt costs ben whole numbers, Example: 8 Format of percentages: 8% Words must bein copia eters. ‘what total overhead cost wil be charged to Coton using the traditional allocation? inasw.ons ‘Answer from your tutor: Feport tis answer G estezss tone 0 ater sse ‘Overhead cost assigned to Cotton = P600,000 Explanation: ‘Traditional allocation volves the allocation of factory overhead to products based on the volume of production resources “consumed, such asthe amount of ect labor hours consumed, direct labor cost, or macrine hours use In order to perform the tadtonal method, ts also imoortant to understand each ofthe involved cost components: drect materials. ect lor, and manufacturing overhead, Direct materials and direct labor are cost categories that are relatively easy to trace toa product. Direct material comprises the supoies used in manufacturing that can be traced recly tothe product. Direct labor is the work used in manufacturing that can be directly traced to the product. Ainough the processes for tracing the costs citer both job order costing and peacess costing trace the material an labor through materials requisition requests and time cards or ‘lecironic mechanisms for measuring labor input. Job order costing traces the costs drectly to the product, and process ‘costing traces the costs tothe manufacturing department Solution ‘Total Overhead Cost 1200000 Direct labor ours 400000 1Predetermined Overhead Rate = Total Overhead Cost / Direct Labor Hours Predetermined 3 pec hour have: (Overhead cost assignee to Cotton = Predetermined Overhead Rate x Number of hours used Overhead cost assign to Cotton = PS por hour x 200,000 huts ‘Overhead cost assigned to Cotton = P600,000 | nope everything ls clear. Thank you so much! ss aero You 47 minutes age ‘can put also to woo! You 47 minutes ago sothat can compare t ‘Add a commenti you nave any folow-up question about this answer Send ‘Assad our ana Gas you shoud never copy hase answers you ow, Tr are hee hap show you ow yeu can se hs qestion nxt time on your own. Use Course Hero everywhere Search and connect quickly wih expert tutors Company Get Course Hero careers AboutUs ws Loadershin ‘Scholwetion aed coves ‘Stomae (Chroma Exonson RA Active tucatr utes 28Help Lega Connect with Us Senta Us ‘Sorat Plcy Colne Lite ma Acaderi Ineorty Facebook ‘oa (Our Honor Co “itor Pivacy Pai, nko Tomaat Youtube ttc estan venugb SecuneD Copyright © 2023. Course Hero, Course Hero not sponsored or endorse by any college or univers 3