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:
Explanation:
| Activity Cost Pool | Activity Rates | ||
| Labor related | $ | 7.40 | per direct labor-hour |
| Machine related | $ | 3.41 | per machine-hour |
| Machine setups | $ | 41.00 | per setup |
| Production orders | $ | 195.00 | per order |
| Shipments | $ | 106.00 | per shipment |
| General factory | $ | 3.81 | per direct labor-hour |
| | |||
| Cost and activity data have been supplied for the following products: |
| K425 | M67 | |||
| Direct materials cost per unit | $ | 5.72 | $ | 39.99 |
| Direct labor cost per unit | $ | 3.72 | $ | 6.54 |
| Number of units produced per year | 3,900 | 40 | ||
| | ||||
| Total Expected Activity | |||
| K425 | M67 | ||
| Direct labor-hours | 890 | 30 | |
| Machine-hours | 3,400 | 35 | |
| Machine setups | 8 | 1 | |
| Production orders | 6 | 1 | |
| Shipments | 10 | 1 | |
| | |||
| Required: |
| Compute the unit product cost of each product listed above. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) |
| K425 | M67 | |
| Unit product cost | $ | $ |
Explanation:
| The overhead costs assigned to each product would be computed as follows: |
| K425 | M67 | |||||
| Expected Activity | Amount | Expected Activity | Amount | |||
| Labor related, at $7.40 per direct labor-hour | 890 | $ | 6,586 | 30 | $ | 222 |
| Machine related, at $3.41 per machine-hour | 3,400 | 11,594 | 35 | 119 | ||
| Machine setups, at $41.00 per setup | 8 | 328 | 1 | 41 | ||
| Production orders, at $195.00 per order | 6 | 1,170 | 1 | 195 | ||
| Shipments, at $106.00 per shipment | 10 | 1,060 | 1 | 106 | ||
| General factory, at $3.81 per direct labor hour | 890 | 3,391 | 30 | 114 | ||
| | | |||||
| Total overhead cost assigned (a) | $ | 24,129 | $ | 798 | ||
| | | |||||
| # of units produced | 3,900 | 40 | ||||
| | | |||||
| Overhead cost per unit | $ | 6.19 | $ | 19.94 | ||
| | | |||||
| | ||||||
| The product costs combine direct materials, direct labor, and overhead costs as follows: |
| K425 | M67 | ||||
| Direct materials | $ | 5.72 | $ | 39.99 | |
| Direct labor | 3.72 | 6.54 | |||
| Manufacturing overhead (see above) | 6.19 | 19.94 | |||
| | | ||||
| Unit product cost | $ | 15.63 | $ | 66.47 | |
| | | ||||
