Exercise 6-4 Second-Stage Allocation [LO6-4] Klumper Corporation is a diversifie

Question

Exercise 6-4 Second-Stage Allocation [LO6-4] 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 Cost Pool Activity Rates Supporting direct labor Machine processing Machine setups Production orders S 6.00 per direct labor-hour S 4.00 per machine-hour 50.00 per setup $ 90.00 per order $14.00 per shipment $ 840.00 per product Shipments Product sustaining Activity data have been supplied for the following two products Total Expected Activit M67 2,000 K425 Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders Shipments Product sustaining 200 500 1,500 4 4 80 100

Explanation / Answer

Calculate total overhead cost :

K425 M67 Supporting direct labour 480 3000 Machine processing 400 6000 Machine setup 50 200 Production orders 90 360 Shipments 14 140 Product sustaining 840 840 Total overhead cost 1874 10540

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