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St. Vincent's, Inc., currently uses traditional costing procedures, applying $1,162,400 of overhead to products Beta and Zeta on the basis of direct labor hours. The
St. Vincent's, Inc., currently uses traditional costing procedures, applying $1,162,400 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 37 (SU), and number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow. X04:13:45 Pool No. 3 (Driver: C) Pool No.1 Pool No. 2 Product (Driver: DLH) (Driver: SU) Beta 2,750 1,700 35 Print Zeta 3,500 65 810 Pool Cost $364,000 $300,000 $498,400 The overhead cost allocated to Zeta by using traditional costing procedures would be: Multiple Choice $380,015 $496,015. $584,015. $782,385 None of the answers is correct. Barnett Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, 39 its budgeted cost, and related cost driver is identified below. Activity Material handling Cost Cost Driver $ 234,500 Number of parts Number of parts Material insertion 2,494,000 04:08:39 Automated machinery Finishing Packaging 849,500 Machine hours 189,000 Direct labor hours Orders shipped 189,000 Total $3,956,000 Print The following information pertains to the three product lines for next year: Standard Deluxe Economy Units to be produced 11,900 6,900 3,900 Orders to be shipped 1,190 690 390 Number of parts per unit 29 34 44 Machine hours per unit 20 22 24 Labor hours per unit 21 21 21 What is Barnett's pool rate for the material-insertion activity? Multiple Choice $3.32 per part. $14.53 per part. $4.76 per labor hour. $20.00 per part. None of the answers is correct
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