Use the following information to answer the following Questions
St. Vincent’s, 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 number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.

-The overhead cost allocated to Beta by using activity-based costing procedures would be:
A) $240,000.
B) $356,000.
C) $444,000.
D) $560,000.
E) None of the answers is correct.

Question

Use the following information to answer the following Questions
St. Vincent’s, 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 number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow.

-The overhead cost allocated to Beta by using activity-based costing procedures would be:
A) $240,000. 
B) $356,000. 
C) $444,000. 
D) $560,000. 
E) None of the answers is correct.

Quizplus · Accepted Answer

Activity-based costing allocates overhead costs based on activities that drive costs. The correct allocation for Beta is $444,000.

Use the Following Information to Answer the Following Questions