Klumper Corporation is a diversified manufacturer of industrial goods. The compa
ID: 2554359 • 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 Cost PoolActivity RatesSupporting direct labor$9per direct labor-hourMachine processing$4per machine-hourMachine setups$45per setupProduction orders$160per orderShipments$125per shipmentProduct sustaining$775per product
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?
Total Expected Activity
K425 M67 Number of units produced per year 200 2,000 Direct labor-hours 950 50 Machine-hours 2,400 40 Machine setups 9 2 Production orders 9 2 Shipments 18 2 Product sustaining 2 2Required:
How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?
Explanation / Answer
Activity Cost Pool K425 M67 Supporting direct labor(K425=950*9,M67=50*9) 8550 450 Machine processing(K425=2400*4, M67=40*4) 9600 160 Machine setups (K425=9*45, M67=2*45) 405 90 Production orders (K425=9*160, M67=2*160) 1440 320 Shipments(K425=18*125, M67=2*125) 2250 250 Product sustaining(K425=2*775, M67=2*775) 1550 1550 Total overhead cost 23795 2820
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