Exercise 7-4 (Algo) Second-Stage Allocation [LO7-4] Klumper Corporation is a diversified manufacturer of industrial goods. The company's following six activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Activity Rates $ 11 per direct labor-hour 4 per machine-hour $ 50 per setup $ 150 per order $ 125 per shipment $ 850 per product Shipments Product sustaining Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders 200 2,000 975 40 3,000 30 13 13 Shipments Product sustaining 26 2 2 2.

Exercise 7-4 (Algo) Second-Stage Allocation [LO7-4] Klumper Corporation is a diversified manufacturer of industrial goods. The company's following six activity cost pools and activity rates: Activity Cost Pool Supporting direct labor Machine processing Machine setups Production orders Activity Rates $ 11 per direct labor-hour 4 per machine-hour $ 50 per setup $ 150 per order $ 125 per shipment $ 850 per product Shipments Product sustaining Activity data have been supplied for the following two products: Total Expected Activity K425 M67 Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders 200 2,000 975 40 3,000 30 13 13 Shipments Product sustaining 26 2 2 2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 11-65 (Static) Reciprocal Cost Allocation - Outsourcing a Service Department (LO 11-4, 5) BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting Domestic International Employees 25 45 180 Transactions 25,000 20,000 80,000 Department direct costs $360,000 144,000 936,000 $3,600,000 BluStar estimates that the cost structure in its operations is as follows. Administration Accounting Domestic International Variable costs $150,000 36,000 678,000 $2,562,000 Fixed costs 210,000 108,000 258,000 1,038,000 Total costs $360,000 144,000 936,000 $3,600,000 Avoidable fixed…
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