Red Castle's managers have decided to revise their current assignment of overhead costs to reflect the following ABC cost information: Activity Supervision Inspection Activity cost P100,920 124,000 Activity-cost driver Direct labor hours (DLH) Inspections Activities demanded T-shirts 0.75 DLHrs/unit 45,000 DLHrs 60,000 inspection Sweatshirts 1.2 DLHrs/unit 42,000 DLHrs 17,500 inspections Page 2 of 6 7. Under the revised ABC system, the activity-cost driver rate for the supervision activity is a. P2.58 b. P2.40 c. P2.24 d. P1.16 8. Under the revised ABC system, supervision costs allocated to Sweatshirts will be a. P48,720 b. P100,800 c. P100,920 d. None of these 9. Under the revised ABC system, total overhead costs allocated to Sweatshirts will be c. P224,920 b. P76,720 a. P48,720 d. None of these 10. Under the revised ABC system, overhead costs per unit for the Sweatshirts will be a. P1.29 per unit b. P1.60 per unit c. P2.19 per unit d. P2.47 per unit 11. Using an ABC system, next year's estimates show manufacturing overhead costs will total P228,300 for 52,000 T-shirts. If all other T-shirt costs and sales prices remain the same, the profitability that can be expected is a. P5.41 per t-shirt b. P4.39 per t-shirt c. P1.11 per t-shirt d. PO.81 per t-shirt

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that ba…