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 $ 3 per machine-hour $ 40 per setup $ 170 per order $ 125 per shipment $ 775 per product Activity data have been supplied for the following two products: Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders Shipments Product sustaining Total Expected Activity K425 M67 200 2,000 1,125 40 3,000 30 15 2 15 2 30 2 2 2 Required: How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?

Answer 1

A B C 1 Activity Cost Pool K425 M67 2 Supporting direct labor $ 7,875$ 280 3 Machine Processing $ 9,000 $ 90 4 Machine setups $ 600 $ 80 5 Production orders $ 2,550 $ 340 6 Shipments $ 3,750 $ 250 7 Product sustaining $ 1,550 $ 1,550 8 Total overhead cost $ 25,325 $ 2,590

A B с 1 Activity Cost Pool K425 M67 2 Supporting direct labor =7*1125 =7*40 3 Machine Processing =3*3000 =3*30 4 Machine setups =40*15 =40*2 5 Production orders =170*15 =170*2 6 Shipments |=125*30 =125*2 7 Product sustaining =775*2 =775*2 8 Total overhead cost |=SUM(B2:B7) -SUM(C2:07)