1 Kramerica, Incorporated currently uses traditional costing procedures. They apply $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. Pool Number Pool Number 1 (Driver: 2 (Driver: DLH) SU) 1,200 2,800 Product Beta Zeta Pool Cost $ 160,000 Multiple Choice 45 55 $ 280,000 The overhead cost allocated to Beta by using traditional costing procedures would be $240,000 $356,000 Pool Number 3 (Driver: $444,000 PC) 2,250 750 $360,000
1 Kramerica, Incorporated currently uses traditional costing procedures. They apply $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. Pool Number Pool Number 1 (Driver: 2 (Driver: DLH) SU) 1,200 2,800 Product Beta Zeta Pool Cost $ 160,000 Multiple Choice 45 55 $ 280,000 The overhead cost allocated to Beta by using traditional costing procedures would be $240,000 $356,000 Pool Number 3 (Driver: $444,000 PC) 2,250 750 $360,000
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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