Shalom Company has budgeted overhead costs of P1,200,000. It has allocated overhead on a plant-wide basis...

Transcribed Image Text:

Shalom Company has budgeted overhead costs of P1,200,000. It has allocated overhead on a plant-wide basis to its two products (wool and cotton) using direct labor hours, which are estimated to be 400,000 for the current year. The company has decided to experiment with activity-based costing and has created two activity cost pools and related activity cost drivers. These two cost pools are cutting (the cost driver is machine hours) and design (the cost driver is the number of set-ups). Overhead allocated to the cutting cost pool is P800,000 and P400,000 is allocated to the design cost pool. Additional information related to these pools is as follows: Wool Cotton Machine hours 100,000 100,000 Number of set-ups 800 200 Amounts must be in whole numbers. Example: 88,000 or (88,000) Unit costs be in whole numbers. Example: 88 Format of percentages: 88% Words must be in capital letters. What total overhead cost will be charged to Cotton using the traditional allocation? Shalom Company has budgeted overhead costs of P1,200,000. It has allocated overhead on a plant-wide basis to its two products (wool and cotton) using direct labor hours, which are estimated to be 400,000 for the current year. The company has decided to experiment with activity-based costing and has created two activity cost pools and related activity cost drivers. These two cost pools are cutting (the cost driver is machine hours) and design (the cost driver is the number of set-ups). Overhead allocated to the cutting cost pool is P800,000 and P400,000 is allocated to the design cost pool. Additional information related to these pools is as follows: Wool Cotton Machine hours 100,000 100,000 Number of set-ups 800 200 Amounts must be in whole numbers. Example: 88,000 or (88,000) Unit costs be in whole numbers. Example: 88 Format of percentages: 88% Words must be in capital letters. What total overhead cost will be charged to Cotton using the traditional allocation?