Question
Exercise 7-4 (Algo) Second-Stage Allocation [LO7-4] Klumper Corporation is a diversified manufacturer of industrial goods. The companys activity-based costing system contains the following six activity
Exercise 7-4 (Algo) Second-Stage Allocation [LO7-4]
Klumper Corporation is a diversified manufacturer of industrial goods. The companys 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 | $ | 3 | per machine-hour |
| Machine setups | $ | 45 | per setup |
| Production orders | $ | 150 | per order |
| Shipments | $ | 130 | per shipment |
| Product sustaining | $ | 825 | 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 | 925 | 40 |
| Machine-hours | 2,800 | 30 |
| Machine setups | 11 | 3 |
| Production orders | 11 | 3 |
| Shipments | 22 | 3 |
| Product sustaining | 3 | 3 |
Required:
How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?
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The Internal Auditing Handbook
Authors: K. H. Spencer Pickett
2nd Edition
0470848634, 978-0470848630
