Question: XAA is considering different costing options. They are now using a traditional costing procedures which applies overhead on the basis of machine hours. They have

XAA is considering different costing options. They are now using a traditional costing procedures which applies overhead on the basis of machine hours. They have two products, A and B. XAA is considering a shift to activity-based costing and has created three cost pools. Data on the cost pools and respective driver are shown below.

Pool 1 Pool 2 Pool 3
Product Driver:Machine hour Driver:setup Driver:parts
A 1,200 45 2,250
B 2,800 55 750
Pool Cost $ 160,000 280,000 360,000

The overhead cost allocated to product A by using activity-based costing procedures would be:

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