E7-4 EXERCISE 7-4 Second-Stage Allocation LO7-4 Klumper Corporation is a diversi

Question

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?

Explanation / Answer

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

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