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

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Multiple Choice $9,907.97 $89,171.73 $5,173.02 $136.51
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