Kalmbach manufactures and sells two products: Product 1 and Product 2. The compa

Question

Kalmbach manufactures and sells two products: Product 1 and Product 2. The company is adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Expected Activity Activity Cost PoolsActivity Measures Overhead Product 1Product 2 Total Cost $296,390 Labor-related Production orders Order size Labor hours Orders Machine hours $55,587 $579,866 $931,843 2,700 300 5,000 8,000 400 4,700 10,700 700 9,700 Complete the following in order to determine the total overhead to be applied to Product 2 under activity-based costing Activity Cost PoolsEstimated Overhead Cost Total Expected Activit Labor-related Production Order size Activitv Rate er er er orders Product 2 Activity Cost Pools Labor-related Production Order size Total ov erhead costs assigned Activitv Rate Expected Activit Amount orders

Explanation / Answer

Estimated Total Activity overhead expected rate Activity cost pools cost activity Labor-related 296,390 10700 27.7 per labor hours Production orders 55,587 700 79.41 per order Order size 579,866 9700 59.78 per machine hours Activity cost pools Activity          product 2         rate activity amount Labor-related 27.7 8,000 221600 Production orders 79.41 400 31764 Order size 59.78 4,700 280966 total overehead costs assigned 534330

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