PPG Company manufactures two products: Product SS and Product HH. During January 50 of product SS and 300 of product HH were incurred, and overhead costs of P81, 000 were incurred. An analysis of overhead costs reveals the following activities:

Activity

Cost Driver

Total Cost

1.Materials handling

Number of requisitions

30, 000

2.Machine setups

Number of setups

27, 000

3.Quality inspections

Number of inspections

24, 000

The cost drive volume for each product was as follows:

Cost driver

Product SS

Product HH

Number of requisitions

400

600

Number of setups

150

300

Number of inspections

200

400

Instructions:

a.Determine the overhead rate for each activity

b.Allocate the manufacturing overhead costs to the two products using ABC.