St. James, Inc., currently uses traditional costing procedures, applying $1,029,000 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 cost pools and respective driver volumes follow.
| Product |
Pool No.1
(Driver: DLH) |
Pool No.2
(Driver: SU) |
Pool No.3
(Driver: PC) |
| Beta |
1,700 |
50 |
2,550 |
| Zeta |
3,300 |
60 |
810 |
| Pool Cost |
$250,000 |
$275,000 |
$504,000 |
Required information The overhead cost allocated to Beta by using traditional costing procedures would be closest to:
$679,140. $553,860. some other amount. $465,860. $349,860.
Required information The overhead cost allocated to Zeta by using traditional costing procedures would be closest to:
$465,860. some other amount. $349,860. $553,860. $679,140.