TSS Company is noted for its full line of quality lamps. The company operates one of its plants in TARLAC. That plant produces two types of lamps: classical and modern. JD, the president of the company, recently decided to change from a unit-based, traditional costing system to an activity-based costing system. Before making the change companywide, she wanted to assess the effect on th product cost of the TARLAC plant. This plant was chosen because it produces only two types of lamps; most other plants produce at least a dozen.
To asses the effect of the change, the following data have been gathered (for simplicity, assume one process):
Under the current system, the costs of operating equipment, materials handling and set-ups are assigned to the lamps on the basis of machine hours. Lamps are produced and moved in batches. How much is the difference in total unit cost of classical lamp between traditional and ABC costing system ?

How much is the difference in total unit cost between ABC and traditional costing of modern lamp ?

Transcribed Image Text:

Lamp Quantity Prime Costs Classical 400,000 Modern 100,000 Peso amount * The cost of operating the production equipment. P800,000 P150,000 P950,000 Machine Hours Materials Moves 300,000 81,250 43,750 100,00 P500,000* P900,000 Setups 100 50 P600,000 Lamp Quantity Prime Costs Classical 400,000 Modern 100,000 Peso amount * The cost of operating the production equipment. P800,000 P150,000 P950,000 Machine Hours Materials Moves 300,000 81,250 43,750 100,00 P500,000* P900,000 Setups 100 50 P600,000

Answer rating: 100% (QA)

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