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 $ 8 per direct labor-hour $ 5 per machine-hour $ 45 per setup $170 per order $115 per shipment $ 850 per product Activity data have been supplied for the following two products: ences 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 1,025 40 2,600 30 13 13 3 26 3 3 Required: How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?

Answer 1

	K425	M67
total overhead overhead	$29535	$4010

supporting direct labour overhead

supporting direct labour overhead=activity rate of supporting direct labour*expected activity of direct labour hours

for

K425=8*1025=8200

M67=8*40=320

machine processing overhead

machine processing overhead= activity rate of machine processing*expected activity of machine hours

for

K425=5*2600=13000

M67=5*30=150

machine setups overhead

machine setups overhead=activity rate of machine setup*expected activity of machine setups.

for

K425=45*13=585

M67=45*3=135

production orders overhead

production orders overhead=activity rate of production order*expected activity of production order

for

K425=170*13=2210

M67=170*3=510

shipments overhead

shipments overhead=activity rate of shipments*expected activity of shipments

for

K425=115*26=2990

M67=115*3=345

product sustaining overhead

product sustaining overhead=activity rate of product sustaining*expected activity of product sustaining

for

K425=850*3=2550

M67=850*3=2550

total overheads

for

K425=8200+13000+585+2210+2990+2550=29535

M67=320+150+135+510+345+2550=4010