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 $ 40 per setup $ 160 per order $ 130 per shipment $ 775 per product Activity data have been supplied for the following two products: Total Expected Activity K425 M67 200 2,000 1,100 50 40 2 7 2 14 2 2 2 Number of units produced per year Direct labor-hours Machine - hours Machine setups Production orders Shipments Product sustaining 2,400 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

o P M67 =50*8 M N 5 Calculations 6 Calculation of total overhead cost that assigning to k425 and M67' 7 8 Activity Cost pool formula K425 9 Supporting direct labor = direct labor hour * cost per hour =1100*8 10 Machine Processing = Machine hours * cost per machine hour =2400*5 11 Machine Setups = machine Setups * Cost per setup =7*40 12 Production orders = Production orders * cost per machine order =7*160 13 Shipments = Shipments * Cost per shipment =14*130 14 Product sustaining = Product sustaining * Cost per product sustaining =2*775 15 Total overhead cost =SUM(09:014) -40*5 = =2*40 =2*160 =2*130 =2*775 =SUM(P9:P14) 16

L M N o P Q 5 5 6 Calculation of total overhead cost that assigning to k425 and M67' 7 8 9 10 11 Activity Cost pool formula K425 M67 Supporting direct labor = direct labor hour* cost per hour $ 8,800 $ 400 Machine Processing = Machine hours * cost per machine hour $ 12,000 $ 200 Machine Setups = machine Setups * Cost per setup $ 280 $ 80 Production orders = Production orders * cost per machine order $ 1,120 $ 320 Shipments = Shipments * Cost per shipment $ 1,820$ 260 Product sustaining = Product sustaining * Cost per product sustaining $ 1,550 $ 1,550 Total overhead cost $ 25,570 $ 2,810 12 13 14 15 16 17 18 19 I hope this solves your doubt. Feel free to comment if you still have any query or need something else. I'll help asap. Do give a thumbs up if you find this helpful. 20