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	Activity Rates
Supporting direct labor	$	9	per direct labor-hour
Machine processing	$	5	per machine-hour
Machine setups	$	45	per setup
Production orders	$	170	per order
Shipments	$	120	per shipment
Product sustaining	$	800	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	1,200	50
Machine-hours	3,600	40
Machine setups	5	2
Production orders	5	2
Shipments	10	2
Product sustaining	2	2

Required:

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

Answer 1

Answer-

Klumper Corporation
Overhead cost (Activity Based Costing)
Particulars	K425	M67
	$	$
Supporting direct labor	1200 Labor hours*$9 per hour= $10800	50 Labor hours*$9 per hour= $450
Machine processing	3600 machine hour*$5 per hour= $18000	40 machine hour*$5 per hour= $200
Machine Setup cost	5 setups*$45 per setup= $225	2 setups*$45 per setup= $90
Production orders	5 order*$170 per order= $850	2 order*$170 per order= $340
Shipments	10 shipments*$120 per shipment= $1200	2 shipments*$120 per shipment= $240
Product sustaining	2 product*$800 per product= $1600	2 product*$800 per product= $1600
Total overhead cost $	32675	2920