St. James, Inc., 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 a number of parts components (PC) as cost drivers. Data on the costs pools and respective driver volumes follow: Product Pool No. 1 (Driver: DLH) Pool No. 2 (Driver: SU) Pool No. 3 (Driver: PC) Beta 1,200 Zeta 2,800 Pool cost $160,000 45 55 $280,000 2,250 750 $360,000 The overhead cost allocated to Beta by using traditional costing procedures would be: a. $240,000 b. $356,000 c. $444,000 d. $560,000

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Chapter5: Process Costing
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St. James, Inc., 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 a number of parts components (PC) as cost drivers.
Data on the costs pools and respective driver volumes follow:
Product Pool No. 1 (Driver: DLH) Pool No. 2 (Driver: SU) Pool No. 3 (Driver: PC)
Beta
1,200
Zeta
2,800
Pool cost $160,000
45
55
$280,000
2,250
750
$360,000
The overhead cost allocated to Beta by using traditional costing procedures would be:
a. $240,000
b. $356,000
c. $444,000
d. $560,000
Transcribed Image Text:St. James, Inc., 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 a number of parts components (PC) as cost drivers. Data on the costs pools and respective driver volumes follow: Product Pool No. 1 (Driver: DLH) Pool No. 2 (Driver: SU) Pool No. 3 (Driver: PC) Beta 1,200 Zeta 2,800 Pool cost $160,000 45 55 $280,000 2,250 750 $360,000 The overhead cost allocated to Beta by using traditional costing procedures would be: a. $240,000 b. $356,000 c. $444,000 d. $560,000
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