FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:St. James, Inc, currently uses traditional costing procedures, applying $800,000 of overhead to products
Beta and Zeta on the basis of direct labor hours. The company is considering a shift to activity-based
costing and the creation of individual cost pools that will use direct labor hours (DLH), production setups
(SU), and number of parts components (PC) as cost drivers. Data on the costs pools and respective driver
volumes follow:
Pool No. 1
Pool No. 2
Pool No. 3
Product (Driver: DLH) (Driver: SU) (Driver: PC)
Beta
1,200
45
2,250
Zeta
2,800
55
750
Pool Cost
$160,000
S280,000
S360,000
1 The overhead cost allocated to Beta by using traditional costing procedures would be:
a. $240,000
b. $356,000
c. $444,000
d. $560,000
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