Question

Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activity-based costing system contains the...

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 $ 7 per direct labor-hour
Machine processing $ 4 per machine-hour
Machine setups $ 40 per setup
Production orders $ 160 per order
Shipments $ 120 per shipment
Product sustaining $ 775 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 1,050 50
Machine-hours 3,400 40
Machine setups 7 3
Production orders 7 3
Shipments 14 3
Product sustaining 3 3

Required:

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

Homework Answers

Answer #1
Klumper corporation - ABC costing system
Activity Cost Pool K425 M67
Supporting Direct labour 1050 * 7 7350 50 * 7 350
Machine processing 3400 * 4 13600 40 * 4 160
Machine setups 40 * 7 280 40* 3 120
Production orders 160 * 7 1120 160* 3 480
Shipments 120 * 14 1680 120 * 3 360
Product sustaining 775 * 3 2325 775 * 3 2325
Total OH cost 26355 3795
Units produced 200 2000
Per unit OH cost 131.775 1.8975
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