Lobredo Company is a wholesale distributor that uses activity-based costing for all of its

overhead costs. The company has provided the following data concerning its annual overhead
costs and its activity based costing system:
Overhead costs:
Wages and salaries .. P580,000
Other expenses ...... P200,000
Total ............. P780,000

Distribution of resource consumption:

Activity Cost Pools

Filling Customer
Orders Support Other Total
Wages and salaries .. 40% 50% 10% 100%
Other expenses ...... 35% 45% 20% 100%

The "Other" activity cost pool consists of the costs of idle capacity and organization-
sustaining costs.
The amount of activity for the year is as follows:

Activity Cost Pool Activity

Filling orders ...... 1,000 orders
Customer support .... 30 customers

1. What would be the total overhead cost per order according to the activity
based costing system? In other words, what would be the overall activity rate
for the filling orders activity cost pool? (Round to the nearest whole cent.)
a. P273.00
b. P302.00
c. P312.00
d. P292.50

2. What would be the total overhead cost per customer according to the activity
based costing system? In other words, what would be the overall activity rate
for the customer support activity cost pool? (Round to the nearest whole
peso.)
a. P11,700
b. P13,000
c. P12,350
d. P12,667
 3. To the nearest whole peso, how much wages and salaries cost would be
allocated to a customer who made 4 orders in a year?
a. P8,859.
b. P7,124.
c. P10,595.
d. P14,248.

Escoto Company is a wholesale distributor that uses activity-based costing for all of its overhead
costs. The company has provided the following data concerning its annual overhead costs and its
activity based costing system:
Overhead costs:
Wages and salaries .. P540,000
Other expenses ...... P200,000
Total ............. P740,000

Distribution of resource consumption:

Activity Cost Pools
Filling Customer
Orders Support Other Total
Wages and salaries .. 10% 80% 10% 100%
Other expenses ...... 20% 60% 20% 100%

The "Other" activity cost pool consists of the costs of idle capacity and organization-
sustaining costs.
The amount of activity for the year is as follows:

Activity Cost Pool Activity

Filling orders ...... 4,000 orders
Customer support .... 40 customers

4. What would be the total overhead cost per order according to the activity
based costing system? In other words, what would be the overall activity rate
for the filling orders activity cost pool? (Round to the nearest whole cent.)
a. P27.75
b. P37.00
c. P23.50
d. P18.50
 5. What would be the total overhead cost per customer according to the activity
based costing system? In other words, what would be the overall activity rate
for the customer support activity cost pool? (Round to the nearest whole
peso.)
a. P12,950
b. P11,100
c. P14,800
d. P13,800

6. To the nearest whole peso, how much wages and salaries cost would be
allocated to a customer who made 8 orders in a year?
a. P7,474.
b. P14,948.
c. P9,191.
d. P10,908.

Solis Company has two products: A and B. The annual production and sales of Product A is 800
units and of Product B is 500 units. The company has traditionally used direct labor-hours as the
basis for applying all manufacturing overhead to products. Product A requires 0.3 direct labor
hours per unit and Product B requires 0.2 direct labor hours per unit. The total estimated
overhead for next period is P92,023.
The company is considering switching to an activity-based costing system for the purpose of
computing unit product costs for external reports. The new activity-based costing system would
have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with
estimated overhead costs and expected activity as follows:

Estimated
Activity Overhead Expected Activity
Cost Pool Costs Product A Product B Total
Activity 1 P14,487 500 600 1,100
Activity 2 P64,800 2,500 500 3,000
General Factory P12,736 240 100 340
Total P92,023

(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor
hours.)

7. The predetermined overhead rate under the traditional costing system is

closest to:
a. P37.46.
b. P21.60.
c. P13.17.
d. P270.66.
 8. The overhead cost per unit of Product B under the traditional costing system
is closest to:
a. P54.13.
b. P7.49.
c. P4.32.
d. P2.63.

9. The predetermined overhead rate (i.e., activity rate) for Activity 1 under the
activity-based costing system is closest to:
a. P28.97.
b. P13.17.
c. P83.66.
d. P24.15.

10. The overhead cost per unit of Product A under the activity-based costing
system is closest to:
a. P86.97.
b. P70.79.
c. P81.20.
d. P11.24.

Esteves Company has two products: A and B. The annual production and sales of Product A is
1,700 units and of Product B is 1,100 units. The company has traditionally used direct labor-
hours as the basis for applying all manufacturing overhead to products. Product A requires 0.3
direct labor hours per unit and Product B requires 0.6 direct labor hours per unit. The total
estimated overhead for next period is P98,785.
The company is considering switching to an activity-based costing system for the purpose of
computing unit product costs for external reports. The new activity-based costing system would
have three overhead activity cost pools--Activity 1, Activity 2, and General Factory--with
estimated overhead costs and expected activity as follows:

Estimated
Activity Overhead Expected Activity
Cost Pool Costs Product A Product B Total
Activity 1 P30,528 1,000 600 1,600
Activity 2 P17,385 1,700 200 1,900
General Factory P50,872 510 660 1,170
Total P98,785

(Note: The General Factory activity cost pool's costs are allocated on the basis of direct labor
hours.)
 11. The predetermined overhead rate under the traditional costing system is
closest to:
a. P9.15.
b. P43.48.
c. P84.43.
d. P19.08.

12. The overhead cost per unit of Product B under the traditional costing system
is closest to:
a. P50.66.
b. P5.49.
c. P26.09.
d. P11.45.

13. The predetermined overhead rate (i.e., activity rate) for Activity 2 under the
activity-based costing system is closest to:
a. P9.15.
b. P51.99.
c. P86.93.
d. P10.23.

14. The overhead cost per unit of Product B under the activity-based costing
system is closest to:
a. P50.66.
b. P26.09.
c. P35.28.
d. P38.16.

Berezo Company uses activity-based costing. The company has two products: A and B. The
annual production and sales of Product A is 200 units and of Product B is 400 units. There are
three activity cost pools, with estimated costs and expected activity as follows:

Activity Estimated Expected Activity

Cost Pool Cost Product A Product B Total
Activity 1 P16,660 600 100 700
Activity 2 P18,450 1,100 700 1,800
Activity 3 P 9,731 60 160 220

15. The cost per unit of Product B is closest to:

a. P41.58.
b. P81.53.
c. P74.73.
d. P17.69.