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?
| 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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