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 activity pools . Data on the cost pools and respective driver are shown below.

Pool No 1 Pool No 2 Pool No 3

Product Driver: Machine hours Driver: Setups Driver: Parts

A 1200 45 2,250

B 2800 55 750

Pool cost $160,000 $280,000 $360,000

The overhead cost allocated to product A by using traditional costing procedures would be:

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