Klumper Corporation is a diversified manufacturer of industrial goods. The compa

Question

Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activity-based costing system contains the following six activity cost pools and activity rates:

Activity data have been supplied for the following two products:

Total Expected Activity

Required:

How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?

Activity Cost Pool Activity Rates Supporting direct labor $ 11 per direct labor-hour Machine processing $ 3 per machine-hour Machine setups $ 35 per setup Production orders $ 150 per order Shipments $ 130 per shipment Product sustaining $ 775 per product

Explanation / Answer

Calculate total overhead cost :

K425 M67 Supporting direct labor 11275 550 Machine processing 7200 120 Machine setups 595 70 Production orders 2550 300 Shipments 4420 260 Product sustaining 1550 1550 Total overhead cost 27590 2850

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