Exercise 8 - Exercise 8-4 Second-Stage Allocation [LO4]...

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Exercise 8-4 Second-Stage Allocation [LO4] 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 $ 9 per direct labor-hour Machine processing $ 4 per machine-hour Machine setups $ 45 per setup Production orders $ 170 per order Shipments $ 110 per shipment Product sustaining $ 775 per product Activity data have been supplied for the following two products:
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Total Expected Activity K425 M67 Number of units produced per year 1,600 130 Direct labor-hours 1,200 50 Machine-hours 3,000 40 Machine setups 7 3 Production orders 7 3 Shipments 14 3 Product sustaining 3 3 Required: Determine the total overhead cost that would be assigned to each of the products listed in the activity-based costing system. (Omit the "$" sign in your response.) Activity Cost Pool K425
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M67 Supporting direct labor $ 10,800 $ 450 Machine processing 12,000 160 Machine setups 315 135 Production orders 1,190 510 Shipments 1,540 330 Product sustaining 2,325 2,325 Total overhead cost $ 28,170 $ 3,910
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Feedback: Activity Cost Pool Activity Rate Activity ABC Cost K425: Supporting direct labor $ 9 per direct labor-hour 1,200 direct labor-hours $ 10,800 Machine processing $ 4 per machine-hour 3,000 machine-hours 12,000 Machine setups $ 45 per setup 7
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setups 315 Production orders $ 170 per order 7 order 1,190 Shipments $ 110 per shipment 14 shipment 1,540 Product sustaining $ 775 per product 3 product 2,325 Total overhead cost $
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28,170 M67: Supporting direct labor $ 9 per direct labor-hour 50 direct labor-hours $ 450 Machine processing $ 4 per machine-hour 40 machine-hours 160 Machine setups $ 45 per setup 3 setups 135 Production orders
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$ 170 per order 3 orders 510 Shipments $ 110 per shipment 3 shipments 330 Product sustaining $ 775 per product 3 product 2,325 Total overhead cost $ 3,910
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Exercise 8-5 Product and Customer Profitability Analysis [LO4, LO5] Thermal Rising, Inc., makes paragliders for sale through specialty sporting goods stores. The company has a standard paraglider model, but also makes custom-designed paragliders. Management has designed an activity-based costing system with the following activity cost pools and activity rates: Activity Cost Pool Activity Rate Supporting direct labor $ 18 per direct labor-hour Order processing $ 276 per order Custom designing processing $ 181 per custom design Customer service
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$ 364 per customer Management would like an analysis of the profitability of a particular customer, Big Sky Outfitters, which has ordered the following products over the last 12 months: Standard Model
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Custom Design Number of gliders 18 3 Number of orders 2 3 Number of custom designs 0 3 Direct labor-hours per glider 25 25 Selling price per glider $ 1,875 $ 2,450 Direct materials cost per glider $ 569 $ 625
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The company's direct labor rate is $18 per hour. Required:
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This note was uploaded on 10/17/2010 for the course ACCT 1234 taught by Professor Duck during the Spring '10 term at A.T. Still University.

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Exercise 8 - Exercise 8-4 Second-Stage Allocation [LO4]...

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