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 Cost Pool Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining Activity Rates $ 7 per direct labor-hour $ 4 per machine-hour 5 40 per setup $ 150 per order $ 115 per shipment $ 775 per product Activity data have been supplied for the following two products Total Expected Activit K425 M67 Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders Shipments Product sustaining 200 1,150 3,200 15 15 30 2,000 50 40 Required How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system? Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining Total overhead cost K425 M67

Explanation / Answer

Calculation of total overhead cost assigned to K425: Activity cost pool K425 Supporting Direct labour(7*1150) 8050 Machine processing(4*3200) 12800 Machine setups(40*15) 600 Production orders(150*15) 2250 Shipments(115*30) 3450 Product sustaining(775*2) 1550 Total overhead cost 28700 Calculation of total overhead cost assigned to M67: Activity cost pool M67 Supporting Direct labour(7*50) 350 Machine processing(4*40) 160 Machine setups(40*2) 80 Production orders(150*2) 300 Shipments(115*2) 230 Product sustaining(775*2) 1550 Total overhead cost 2670

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