Thursday 20 December 2018

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:

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 PoolActivity Rates
Supporting direct labor$6per direct labor-hour
Machine processing$4per machine-hour
Machine setups$50per setup
Production orders$90per order
Shipments$14per shipment
Product sustaining$840per product


Activity data have been supplied for the following two products:

Total Expected Activity
K425M67
Number of units produced per year2002,000
Direct labor-hours80500
Machine-hours1001,500
Machine setups14
Production orders14
Shipments110
Product sustaining11


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


Explanation

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