Exercise 64 SecondStage Allocation LO64 Klumper Corporation

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

Solution

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