XAA is considering different costing options. They are now using a traditional costing procedures which applies overhead on the basis of direct labor hours. They have two products, A and B. XAA is considering a shift to activity-based costing and has created three cost pools that will use Machine hours (MH), setups, and number of parts as cost drivers. 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
Total overhead is $800,000
The overhead cost allocated to product A by using activity-based costing procedures would be: