Provincial Government of Ilocos Sur established a one-stop quarantine facility where returning residents shall be given proper monitoring and treatment to protect the province against the wrath of the COVID-19 pandemic. During the first three months of operations, the province’s government allocates quarantine costs to the local government units (LGUs) based on the number of quarantiners. However, the newly-appointed provincial accountant suggested the adoption of Activity-Based Costing system which she believes that it is a more accurate approach of allocating costs to the LGUs. After the critical analysis and evaluation of the different major activity centers, cost drivers and cost estimates, the accountant presented the following data to the governor for review and approval: Activity Center Quarantine Cost Cost Driver Activity Level Transportation P 340,000 kilometers 42,500 Swab Testing P 1,200,000 tests 960 Accommodation P 1,575,000 quarantiners 750 Facility Service P 700,000 service hours 1,750 Assessment P 640,000 check ups 2,560 Other protocols P 145,000 labor hours 1,250 After the governor’s approval of the proposed system, three (3) LGU accountants wanted to know the costs allocated to their respective LGUs for the month of May 2021. Pertinent data for the concerned LGUs are as follow: Cost Center LGU Vigan City LGU Candon City LGU Sta. Lucia kilometers 8,500 7,650 3,400 tests 192 173 77 quarantiners 160 144 64 service hours 350 315 140 check ups 512 461 205 labor hours 250 113 100 Find the following: Allocation rate under the previous costing system Quarantine cost allocated to LGU Vigan City under the previous costing system; Quarantine cost allocated to LGU Candon City under the previous costing system; Quarantine cost allocated to LGU Sta. Lucia under the previous costing system; Quarantine cost allocated to LGU Vigan City under the new costing system; Quarantine cost allocated to LGU Candon City under the new costing system; Quarantine cost allocated to LGU Sta. Lucia under the new costing system.

Provincial Government of Ilocos Sur established a one-stop quarantine facility where returning residents shall be given proper monitoring and treatment to protect the province against the wrath of the COVID-19 pandemic. During the first three months of operations, the province’s government allocates quarantine costs to the local government units (LGUs) based on the number of quarantiners. However, the newly-appointed provincial accountant suggested the adoption of Activity-Based Costing system which she believes that it is a more accurate approach of allocating costs to the LGUs. After the critical analysis and evaluation of the different major activity centers, cost drivers and cost estimates, the accountant presented the following data to the governor for review and approval: Activity Center Quarantine Cost Cost Driver Activity Level Transportation P 340,000 kilometers 42,500 Swab Testing P 1,200,000 tests 960 Accommodation P 1,575,000 quarantiners 750 Facility Service P 700,000 service hours 1,750 Assessment P 640,000 check ups 2,560 Other protocols P 145,000 labor hours 1,250 After the governor’s approval of the proposed system, three (3) LGU accountants wanted to know the costs allocated to their respective LGUs for the month of May 2021. Pertinent data for the concerned LGUs are as follow: Cost Center LGU Vigan City LGU Candon City LGU Sta. Lucia kilometers 8,500 7,650 3,400 tests 192 173 77 quarantiners 160 144 64 service hours 350 315 140 check ups 512 461 205 labor hours 250 113 100 Find the following: Allocation rate under the previous costing system Quarantine cost allocated to LGU Vigan City under the previous costing system; Quarantine cost allocated to LGU Candon City under the previous costing system; Quarantine cost allocated to LGU Sta. Lucia under the previous costing system; Quarantine cost allocated to LGU Vigan City under the new costing system; Quarantine cost allocated to LGU Candon City under the new costing system; Quarantine cost allocated to LGU Sta. Lucia under the new costing system.

Cornerstones of Cost Management (Cornerstones Series)

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ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

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However, the newly-appointed provincial accountant suggested the adoption of Activity-Based Costing system which she believes that it is a more accurate approach of allocating costs to the LGUs. After the critical analysis and evaluation of the different major activity centers, cost drivers and cost estimates, the accountant presented the following data to the governor for review and approval:

Activity Center	Quarantine Cost	Cost Driver	Activity Level
Transportation	P 340,000	kilometers	42,500
Swab Testing	P 1,200,000	tests	960
Accommodation	P 1,575,000	quarantiners	750
Facility Service	P 700,000	service hours	1,750
Assessment	P 640,000	check ups	2,560
Other protocols	P 145,000	labor hours	1,250

After the governor’s approval of the proposed system, three (3) LGU accountants wanted to know the costs allocated to their respective LGUs for the month of May 2021. Pertinent data for the concerned LGUs are as follow:

Cost Center	LGU Vigan City	LGU Candon City	LGU Sta. Lucia
kilometers	8,500	7,650	3,400
tests	192	173	77
quarantiners	160	144	64
service hours	350	315	140
check ups	512	461	205
labor hours	250	113	100

Find the following:

Allocation rate under the previous costing system
Quarantine cost allocated to LGU Vigan City under the previous costing system;
Quarantine cost allocated to LGU Candon City under the previous costing system;
Quarantine cost allocated to LGU Sta. Lucia under the previous costing system;
Quarantine cost allocated to LGU Vigan City under the new costing system;
Quarantine cost allocated to LGU Candon City under the new costing system;
Quarantine cost allocated to LGU Sta. Lucia under the new costing system.

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