St James, Inc The Overhead Cost Allocated to Beta by Using Traditional Costing

question 47

Multiple Choice

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 number of parts components (PC) as cost drivers. Data on the cost pools and respective driver volumes follow. $\begin{array}{cccc}& \text { Pool No. 1 } & \text { Pool No. 2 } & \text { Pool No. 3 } \\\text { Product } & \text { (Driver: DLH) } & \text { (Driver: SU) } & \text { (Driver: PC) }\\\hline\text { Beta } & 1,200 & 45 & 2,250 \\\text { Zeta } & 2,800 & 55 & 750 \\& & & \\\text { Pool Cost } & \$ 160,000 & \$ 280,000 & \$ 360,000\end{array}$ 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.
• E) None of the other answers is correct.

---

Definitions:

Assessments

Evaluations or measurements of a student’s performance, knowledge, skills, or abilities in a specified area.

Social Rejection

The act or experience of being deliberately excluded or ignored by other people or social groups.

Aggressive Behavior

A pattern of behavior intended to harm or injure others, either physically or verbally.

Play Trucks

Toy vehicles designed for children to play with, often stimulating imagination and learning through physical and pretend play.