QUESTION 6

St. Vincents, Inc., currently uses traditional costing procedures, applying $827,000 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		1,470				40				2,925
Zeta		3,430				60				975
Pool Cost	$	169,000			$	289,000			$	369,000

The overhead cost allocated to Beta by using activity-based costing procedures would be:

Multiple Choice

• $248,100.

• $383,950.

• $443,050.

• $578,900.

• None of the answers is correct.