Klumper Corporation is a diversified manufacturer of industrial goods. The compa
ID: 2544988 • 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 $ 45 per setup Production orders $ 150 per order Shipments $ 115 per shipment Product sustaining $ 775 per productExplanation / Answer
Answer : Calculation of Total Overhead Cost Activity Cost Pool Products K425 M67 Supporting direct labor $ 7,050 $ 300 Machine processing $ 10,800 $ 120 Machine setups $ 945 $ 45 Production orders $ 3,150 $ 150 Shipments $ 4,830 $ 115 Product sustaining $ 775 $ 775 ------------------ ---------------- TOTAL OVERHEAD COST $ 27,550 $ 1,505 ========== ========= Working Notes : Cost of Expected Activity 1 Cost for Supporting Direct Labor = Direct Labor-hours required per year X Supporting Direct Labor rate per hour For Product K425 = 1,175 Direct Labor hours X $ 6 per hour = $ 7,050 For Product M67 = 50 Direct Labor hours X $ 6 per hour = $ 300 Cost Expected Activity 2 Cost for Machine Processing = Machine-hours required per year X Machine Processing rate per hour For Product K425 = 3,600 Machine hours X $ 3 per hour = $ 10,800 For Product M67 = 40 Machine hours X $ 3 per hour = $ 120 Cost Expected Activity 3 Cost for Machine Setups = Machine Setups per year X Rate per Machine Setup For Product K425 = 21 Setups X $ 45 per Setup = $ 945 For Product M67 = 1 Setups X $ 45 per Setup = $ 45 Cost Expected Activity 4 Cost for Production orders = Production orders per year X Rate per Production order For Product K425 = 21 Production orders X $ 150 per Production order = $ 3,150 For Product M67 = 1 Production order X $ 150 per Production order = $ 150 Cost Expected Activity 5 Cost for Shipments = Shipments per year X Rate per Shipment For Product K425 = 42 Shipements X $ 115 per Shipment = $ 4,830 For Product M67 = 1 Shipements X $ 115 per Shipment = $ 115 Cost Expected Activity 6 Cost for Product Sustaining = Products Sustaining per year X Rate per Product Sustaining For Product K425 = 1 Product Sustaining X $ 775 per Product = $ 775 For Product M67 = 1 Product Sustaining X $ 775 per Product = $ 775
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.