St. Vincent’s, Inc., currently uses traditional costing procedures, applying $993,600 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. Product Pool No.1 (Driver: DLH) Pool No. 2 (Driver: SU) Pool No. 3 (Driver: PC) Beta 2,100 35 2,750 Zeta 3,300 60 770 Pool Cost $ 270,000 $ 266,000 $ 457,600 What would the overhead cost allocated to Beta by using traditional costing proced
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. Vincent’s, Inc., currently uses traditional costing procedures, applying $993,600 of
| Product | Pool No.1 (Driver: DLH) | Pool No. 2 (Driver: SU) | Pool No. 3 (Driver: PC) | ||||||||
| Beta | 2,100 | 35 | 2,750 | ||||||||
| Zeta | 3,300 | 60 | 770 | ||||||||
| Pool Cost | $ | 270,000 | $ | 266,000 | $ | 457,600 | |||||
What would the overhead cost allocated to Beta by using traditional costing procedures be?
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