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Klumper Corporation is a diversified manufacturer of industrial goods

Accounting Aug 08, 2020

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 per direct labor- $ 6 labor hour Machine processing $ 4 per machine-hour Machine setups $ 50 per setup Production orders $150 per order Shipments $110 per shipment Product sustaining $875 per product Activity data have been supplied for the following two products: 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 1,125 50 2,600 40 17 2 17 2 34 2 2 2 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

Expert Solution

Answer:-

Determine total overhead cost

Activity cost pool K425 M67
Supporting direct labor 6×1125 =6750 6×50 = 300
Machine processing 4×2600 = 10400 4×40 = 160
Machine setup 50×17 = 850 50×2 =100
Production orders 150×17 = 2550 150×2 =300
Shipments 110×34 = 3740 110×2= 220
Product sustaining 875×2 = 1750 875 × 2 =1750
Total overhead cost 26040 2830
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