A company has identified the following overhead costs and cost drivers for the coming year.

Overhead Item Cost Driver Budgeted Cost Budgeted Activity Level

Machine setup No. of setups $ 20,000 200
Inspection No. of inspections $130,000 6,500
Material handling No. of material moves $ 80,000 8,000
Engineering Engineering hours $ 50,000 1,000
$280,000
The following information was collected on three jobs that were completed during the year:
Job 101 Job 102 Job 103
Direct materials $5,000 $12,000 $8,000
Direct labor $2,000 $ 2,000 $4,000
Units completed 100 50 200
Number of setups 1 2 4
Number of inspections 20 10 30
Number of material moves 30 10 50
Engineering hours 10 50 10
Budgeted direct labor cost was $100,000, and budgeted direct material cost was $280,000.
14. If the company uses activity-based costing, how much overhead cost should be allocable to Job 101?
a. $1,300 b. $2,000 c. $5,000 d. $5,600
15. If the company uses activity-based costing, compute the cost of each unit of Job 102.
a. $340 b. $392 c. $440 d. $520
16. The company prices its products at 140% of cost. If the company uses activity-based costing, the price
of each unit of Job 103 would be
a. $98 b. $100 c. $116 d. $140

Scottso Enterprises incurs $300,000 in manufacturing overhead costs each month. The company has
been allocating overhead to individual product lines based on direct labor hours
Amount Amount of
Cost driver In Pool Activity
----------- -------- ---------
Direct labor hours $100,000 15,000
Number of batches 150,000 200
Design changes 50,000 125
--------
Total overhead costs $300,000
========
Two products have the following characteristics:

Product X Product Y
--------- ---------
Direct labor hours 1,000 400
Number of batches 10 20
Design changes 1 15

a. Determine the overhead to be allocated to each product using direct labor hours as the only cost
driver.
b. Determine the overhead to be allocated to each product using the three drivers identified.
Gilmore Company produces two products in a single factory. The following production and cost
information has been determined:
Model 1 Model 2
Units produced 1,000 200
Material moves (total) 100 40
Testing time (total) 250 125
Direct labor hours per unit 1 5
The controller has determined total overhead to be P480,000. P140,000 relates to material moves;
P150,000 relates to testing; the remainder is related to labor time.

1. If Gilmore uses direct labor hours to allocate overhead to each model, what would overhead per
unit be for each model?
2. If Gilmore uses activity-based costing to allocate overhead to each model, what would overhead
per unit be each model?