Question

EXERCISE 7–4 Second-Stage Allocation LO7–4

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	Activity Rates
Supporting direct labor	$6 per direct labor-hour
Machine processing	$4 per machine-hour
Machine setups	$50 per setup
Production orders	$90 per order
Shipments	$14 per shipment
Product sustaining	$840 per product

Activity data have been supplied for the following two products:

	Total Expected Activity
	K425	M67
Number of units produced per year	200	2,000
Direct labor-hours	80	500
Machine-hours	100	1,500
Machine setups	1	4
Production orders	1	4
Shipments	1	10
Product sustaining	1	1

Required:

How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?

RAINTREE COSMETIC COMPANY General Journal Credit 10 Account Debit Requirement 1: To record accounts receivable written off during the year 2021: Allowance for uncollectible accounts Accounts receivable To record collection of account receivable previously written off. Accounts receivable Allowance for uncollectible accounts Cash Accounts receivable Debit Credit Requirement 2(a): Account Bad debt expense Allowance for uncollectible accounts Requirement 2(b): Accounts receivable analysis: Beginning balance Add: Credit sales Less: Write-offs Less: Cash collections Ending balance Required allowance for uncollectible accounts Allowance for uncollectible accounts analysis: Beginning balance

Answer 1

In the given question, we are given the cost drivers and activity rates. We have to just multiply each driver to the exact activity rates to get the total overhead cost for the product.

cost of Amount 480 Answer: Statement showing Total overhead R Product K425 Parte ulars Working Supporting direct Labour ($6x 80 hos) Machine proussing ($4x 180 hos) Machine setups ($5041) Production orders ($9061) Shipments ($14x1) Product sustaining (84001) 460 50 90 14 840 Total cost 1$ 1874

cost of workings Statement showing Total overhead P Product M67 Panki culars Supporting direct labour (6x500) Machine processing (4x1500) Machine set ups (50х4) production orders Shipments product sustaining Amount 3000 6000 250 360 140 (90x4) (14 x 10) (8401) Total cost 840 1 $10,540