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 $ 160 per order $ 130 per shipment $ 800 per product Activity data have been supplied for the following two products: Total Expected Activity K425 M67 200 2,000 975 2,400 Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders Shipments Product sustaining 21 21 NNNN Required: How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system? K425 M67 Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining Total overhead cost $ 0 $ 0

Answer 1

Activity Rates
Supporting Direct Labor	7	per DLH
Machine Processing	3	per MH
Machine Setups	40	per setup
Production Orders	160	Per order
Shipments	130	per shipment
Product Sustaining	800	per product
Expected Activity
	X425	M67
Number of units	200	2000
Direct labor hours	975	50
Machine hours	2400	40
Machine Setups	21	2
Production Orders	21	2
Shipments	42	2
Product Sustaining	2	2
Cost Assigned = Activity Rate*Driver Consumed
	X425	M67
Supporting Direct Labor	6825	350
Machine Processing	7200	120
Machine Setups	840	80
Production Orders	3360	320
Shipments	5460	260
Product Sustaining	800	800
Total cost assigned	24485	1930

7 1 Activity Rates 2 Supporting Direct Labor 3 Machine Processing 4. Machine Setups 5 Production Orders 6 Shipments 7 Product Sustaining 40 160 per DLH per MH per setup Per order per shipment per product 130 800 8 9 Expected Activity 10 X425 M67 2000 200 975 2400 50 11 Number of units 12 Direct labor hours 13 Machine hours 14 Machine Setups 15 Production Orders 16 Shipments 17 Product Sustaining 21 42 18 19 Cost Assigned = Activity Rate*Driver Consumed 20 M67 21 Supporting Direct Labor 22 Machine Processing 23 Machine Setups 24 Production Orders 25 Shipments 26 Product Sustaining 27 Total cost assigned X425 =B12*$B2 =C12*$B2 =B13*$B3 =C13*$B3 =B14* $B4 =C14* $B4 =B15* $B5 =C15*$B5 =B16*$B6 =C16*$B6 800 800 =SUM(B21:326) =SUM(C21:C26)