Klumper Corporation is a diversified manufacturer of industrial goods. The compa
ID: 2509088 • Letter: K
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 $ 6 per direct labor-hour Machine processing $ 3 per machine-hour Machine setups $ 40 per setup Production orders $ 160 per order Shipments $ 125 per shipment Product sustaining $ 875 per productExplanation / Answer
Total Expected Activity Rate per Activity Unit Overhead cost assigned K425 M67 K425 M67 Number of units produced per year 200 2,000 Direct labor-hours 925 50 6 5550 300 Machine-hours 2,200 40 3 6600 120 Machine setups 7 1 40 280 40 Production orders 7 1 160 1120 160 Shipments 14 1 125 1750 125 Product sustaining 1 1 875 875 875 TOTAL OVERHEAD ASSIGNED 16175 1620
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