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: 25 Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining Activity Rates $10 per direct labor-hour $ 5 per machine-hour $ 5e per setup $ 150 per order $ 115 per shipment $ 875 per product ebook Activity data have been supplied for the following two products: References Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders Shipments Product sustaining Total Expected Activity K425 M67 200 2,800 925 60 3,000 50 7 2 7 2 2 2

Answer 1

Solution:- Computation of total overhead Cost assigned to K425 & M67 Particulars K425 M67 Supporting Direct Labor[Wn-1] $9,250 $600 Machine Processing[Wn-2] $15,000 $250 Machine Setups[Wn-3] $350 $100 Production Orders[Wn-4] $1,050 $300 Shipment[Wn-5] $1,610 $230 Product Sustaining[Wn-6] $1,750 $1,750 Total Overhead cost $29,010 $3,230 WORKING NOTES:- Wn-1 Supporting Direct Labor Costs:- K425 = 925 hrs × $10 per Direct labour hrs = $9,250 M67 = 60 hrs × $10 per Direct Labor hrs =$600 Wn-2 Machine Processing Costs:- K425 = 3,000 Machine hrs × $5 per Machine hrs = $15,000 M67= 50 Machine hrs × $5 per Machine hrs = $250 Wn-3 Machine Set up Costs:- K425 = 7 setup × $50 per setup = $350 M67 = 3 setup × $50 per setup = $150 Wn-4 Production Orders Costs:- K425 = 7 order × $150 per order = $1,050 M67 = 2 order × $150 per order = $300 Wn-5 Shipment Costs:- K425 = 14 shipments × $115 Per shipment = $1,610 M67 = 2 shipment × $115 per shipment = $230 Wn-6 Product Sustaining Cost:- K425 = 2 product × $875 per product = $1,750 M67 = 2 Product × $875 per product = $1,750