1. Thermal Corporation has two producing department and two service departments labelled P1, P2, S1, S2 respectively. Direct costs for each department and the proportion of service costs used by various departments are as follows:

Cost Center	Direct Costs	Proportion of services used by:
		S1	S2	P1	P2
P1	P100, 000
P2	P50, 000
S1	P15, 000	-	60%	30%	10%
S2	P25, 000	10%	-	50%	40%

In calculating predetermined overhead rates, machine hours are used as the base in P1 and direct labor hours as the base in P2.

P1 P2

Machine hours 50, 000 40, 000

Direct labor hours 40, 000 20, 000

Requirements:

Allocate the service department costs to operating departments and compute the factory overhead rate for P1 and P2 using the following methods:

1. Direct method
2. Step method start with S1
3. Algebraic method

2. The cost accountant of Above the Ankle is considering to use the ABC system in determining the cost of its products.

At present, the company uses the traditional costing system wherein factory overhead costs are allocated based on direct labor hours. The cost accountant believes that the present system maybe providing misleading cost information, hence, the plan to change to the ABC system. For the coming period, the company is planning to use 5,000 direct labor hours, and its total budgeted factory overhead amounts to P90,000, broken down as follows:

Activity	Cost Driver	Budgeted Activity	Budgeted Cost
Setup costs	Number of set ups	40	P20,000
Production monitoring	Number of batches	20	P40,000
Quality control	Number of inspections	1,000	P30,000

Projected data for one of the Companys product, Product B, for the coming period are as follows:

Production and sales 1,000 units

Direct labor hours 2,000 hours

Units per batch 500

Number of setups 4

Number of inspections 200

Direct material cost P10 per unit

Direct labor rate P20 per hour

1. If the Company will use the traditional full cost system, the cost per unit of product B for the coming period will be ____________.
2. If the Company will use the ABC system, the cost per unit of product B for the coming year will be _________.