Question
St. Vincent's, Inc., currently uses traditional costing procedures, applying $1,029,000 of overhead to products Beta and Zeta on the basis of direct labor hours.
St. Vincent's, 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. Pool No.1 Product Beta Zeta (Driver: DLH) Pool No. 2 (Driver: SU) Pool No. 3 (Driver: PC) 1,700 3,300 50 60 2,550 810 Pool Cost $250,000 $275,000 $504,000 The overhead cost allocated to Zeta by using traditional costing procedures would be: Multiple Choice $349,860. $465,860. $553,860. $679,140. None of the answers is correct.
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