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Alden Company currently uses traditional costing procedures, applying $200,000 of overhead to products A and B (the company's only two products) on the basis of

  1. Alden Company currently uses traditional costing procedures, applying $200,000 of overhead to products A and B (the company's only two products) on the basis of direct labor hours. The firm 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.

Alden Company data

Product

Pool No. 1

(Driver: DLH)

Pool No. 2

(Driver: SU)

Pool No. 3

(Driver: PC)

A

400

25

1,900

B

600

75

1,100

Pool Cost

$40,000

$70,000

$90,000

  1. The overhead cost allocated to product B by using traditional costing procedures would be:

$80,000.

$90,500.

$109,500.

$120,000.

an amount other than those listed

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