St James, Inc, currently uses traditional costing procedures, applying S800.000 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 costs pools and respective driver volumes follow: Pool No. 1 Pool No. 2 Pool No. 3 Product (Driver: DLH) (Driver: SU) (Driver: PC) Beta 1.200 45 2250 Zeta 2.800 55 750 Pool Cost $160,000 $280.000 S360.000 2 The overhead cost allocated to Zeta by using traditional costing procedures would be: a. $240,000 b. $356,000 C $444,000 d. $560,000
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
![St. James, Inc., currently uses traditional costing procedures, applying Ss800,000 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 costs pools and respective driver
volumes follow:
Pool No. 1
Pool No. 2
Pool No. 3
Product (Driver: DLH) (Driver: SU) (Driver: PC)
Beta
1,200
45
2.250
Zeta
2,800
55
750
Pool Cost
$160,000
$280,000
$360,000
2 The overhead cost allocated to Zeta by using traditional costing procedures would be:
a. $240,000
b. $356,000
c. $444,000
d. $560,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F78a811db-ae26-48f4-92c7-5c549b2a6960%2F3a855a17-8cb6-4a3f-9b99-9fcf5a427364%2F695oc1_processed.jpeg&w=3840&q=75)
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