Problem: Klumper Corporation is a diversified manufacturer of industrial goods. The
Problem:
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
Labor related $ 6.00 per direct labor-hour
Machine related $ 4.00 per machine-hour
Machine setups $ 50.00 per setup
Production orders $ 90.00 per order
Shipments $ 14.00 per shipment
General factory $ 9.00 per direct labor-hour
Cost and activity data have been supplied for the following
products:
K425
M67
Direct materials cost per unit
$13.00
$ 56.00
Direct labor cost per
unit
$5.60
$3.50
Number of units produced per
year
200
2,000
Total Expected Activity
K425
M67
Direct
labor-hours
80
500
Machine-hours
100
1,500
Machine
setups
1
4
Production
orders
1
4
Shipments
1
10
Required:
Compute the unit product cost of each product listed above.
K425______ M67________
How do I do this problem? First person to show me how to do this
correctly will be awarded lifesaver points.
Attempt:
I thought the problem was done like this for product K425:
Activity & Activities
Rates
Total Expected Activity = Amount
Labor related @
$6.00/DLH
X
80
DLH
$480.00
Machine related @
$4.00/MH
X
100
$400.00
Machine Setups @ $50.00/setup
X
1
$50.00
Production Orders @ $90.00/order
X
1
$90.00
Shipments @
$14.00/shipment
X
1
$14.00
General Factory @
$9.00/DLH
X
Total overhead costs
(a)
$1,034
Number of Units Produced
(b)
200
Overhead Cost Per Unit (a) /
(b)
$5.17
Unit Product Cost for product K425:
Direct Materials cost per
unit
$13.00
Direct Labor cost per
unit
$ 5.60
Manufacturing
Overhead
$ 5.17
Unit Product
Cost
$23.77
What did I do wrong?