How much higher or lower is the monthly quality control cost

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Reference no: EM132803138

L Co. has used a traditional cost accounting system to apply quality control costs uniformly to all products at a rate of 15% of direct labor cost. Monthly direct labor cost for its main product is P30,000. In an attempt to distribute quality control cost more equitably, L is considering ABC. The monthly data shown below have been gathered for the main product. The three activities are (1) income materials inspection, (2) in-process inspection, and (3) product certification. Costs are to be allocated to each activity on the basis of cost drivers.

Required:

Problem 1: How much higher/lower is the monthly quality control cost assigned to the main product using ABC than using the traditional system?

Reference no: EM132803138

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