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3 years ago

Klumper Corporation is a diversified manufacturer of industrial goods. The company’s activity based

Business

1 answer:

lakkis [162]3 years ago

7 0

Answer:

K425 = $20, 705

M67 = $1, 460

Explanation:

Overhead costs are costs on the income statement that exclude direct labor, direct materials and any other direct expenses. These costs are costs that are incurred indirectly, but are necessary for production. These include any advertising, insurance, rent, maintenance, repairs, telephone bills, supplies, utilities, taxes, etc.

Determine the total overhead cost that would be assigned to each of the products listed above in the activity-based costing system.

Activity Cost Pool K425 M67

Supporting direct labor ($) 10, 250 ($) 300

Machine processing 6, 600 60

Machine set-ups 350 50

Production orders 1, 120 160

Shipments 1, 610 115

Product sustaining 775 775

Total overhead cost 20, 705 1, 460

Below are the workings for each product, to determine how we arrive at each amount.

Activity cost pool Activity rate Activity ABC cost ($)

K425

Supporting direct labor $10 per direct labor hour 1, 025 10, 250

Machine processing $3 per machine hour 2, 200 6, 600

Machine set-ups $50 per set-up 7 350

Production orders $160 per order 7 1, 120

Shipments $115 per shipment 14 1, 610

Product sustaining $775 per product 1 775

Total Overhead cost 20, 705

Activity cost pool Activity rate Activity ABC cost ($)

M67

Supporting direct labor $10 per direct labor hour 30 300

Machine processing $3 per machine hour 20 60

Machine set-ups $50 per set-up 1 50

Production orders $160 per order 1 160

Shipments $115 per shipment 1 115

Product sustaining $775 per product 1 775

Total Overhead cost 1, 460

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