1 Kramerica, Incorporated currently uses traditional costing procedures. They apply $800,000 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 Number Pool Number 1 (Driver: 2 (Driver: DLH) SU) 1,200 2,800 Product Beta Zeta Pool Cost $ 160,000 Multiple Choice 45 55 $ 280,000 The overhead cost allocated to Beta by using traditional costing procedures would be $240,000 $356,000 Pool Number 3 (Driver: $444,000 PC) 2,250 750 $360,000

1 Kramerica, Incorporated currently uses traditional costing procedures. They apply $800,000 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 Number Pool Number 1 (Driver: 2 (Driver: DLH) SU) 1,200 2,800 Product Beta Zeta Pool Cost $ 160,000 Multiple Choice 45 55 $ 280,000 The overhead cost allocated to Beta by using traditional costing procedures would be $240,000 $356,000 Pool Number 3 (Driver: $444,000 PC) 2,250 750 $360,000

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Description: 1Kramerica, Incorporated currently uses traditional costing procedures. They apply $800,000 of overhead to products Beta and Zeta on the basis of directlabor hours. The company is considering a shift to activity-based costing and the creation of ind

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

1
Kramerica, Incorporated currently uses traditional costing procedures. They apply $800,000 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 Number Pool Number
1 (Driver: 2 (Driver:
DLH)
SU)
1,200
2,800
Product
Beta
Zeta
Pool Cost $ 160,000
45
55
PC)
2,250
750
$ 280,000
$360,000
The overhead cost allocated to Beta by using traditional costing procedures would be:
Multiple Choice
$240.000
$356,000
Pool Number
3 (Driver:
$444,000

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XYZ Co. currently uses traditional costing procedures, applying $800,000 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. 2 (Drlver: SU) Pool No. 3 (Driver: PC) Pool No.1 (Drlver: DLH) Product 55 2,250 Zeta 1,200 45 750 Beta 2,800 $160,000 $280,000 $360,000 Pool Cost The overhead cost allocated to Zeta by using activity-based costing procedures would be: O a. $444,000. O b. $328,0000. O c. $472,00. O d. None of the given answers. Window O e. $356,000.
Multiple Choice $9,907.97 $89,171.73 $5,173.02 $136.51
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