E7-4

EXERCISE 7-4 Second-Stage Allocation LO7-4 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 Rates Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining $6 $4 per machine-hour $50 per setup $90 per order $14 per shipment per direct labor-hour $840 per product Activity data have been supplied for the following two products Total Expected Activity K425 200 80 100 M67 2,000 500 1,500 Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders Shipments Product sustaining 4 10 Required How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system