Exercise 7-4 (Algo) 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 Cost Pool Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining Activity Rates $ 11 per direct labor-hour $ 4 per machine-hour $ 45 per setup $ 170 per order $ 120 per shipment $ 775 per product Activity data have been supplied for the following two products: Number of units produced per year Direct labor-hours Machine-hours Machine setups Production orders Shipments Product sustaining Total Expected Activity K425 M67 200 2,000 1,100 50 3,200 40 222 21 1 21 1 42 1 1 1 Required: How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system? Activity Cost Pool M67 K425 Supporting direct labor Machine processing Machine setups Production orders Shipments Product sustaining Total overhead cost $ 0 $ 0
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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![Exercise 7-4 (Algo) 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 Cost Pool
Supporting direct labor
Machine processing
Machine setups
Production orders
Shipments
Product sustaining
Activity Rates
$ 11 per direct labor-hour
$ 4
per machine-hour
$ 45 per setup
$ 170 per order
$ 120 per shipment
$ 775 per product
Activity data have been supplied for the following two products:
Number of units produced per year
Direct labor-hours
Machine-hours
Machine setups
Production orders
Shipments
Product sustaining
Total Expected Activity
K425
M67
200
2,000
1,100
50
3,200
40
21
1
21
1
42
1
1
1
Required:
How much total overhead cost would be assigned to K425 and M67 using the activity-based costing system?
Activity Cost Pool
Supporting direct labor
K425
M67
Machine processing
Machine setups
Production orders
Shipments
Product sustaining
Total overhead cost
$
0 $
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F965ff8e4-d92e-4e14-9c2f-1de3d9fd7c98%2Fecabe6dc-21de-4829-bc9d-12125968ccfa%2Fkafkav_processed.jpeg&w=3840&q=75)
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