Question

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Rustafson Corporation is a diversified manufacturer of consumer goods. The company's activity-based costing system has the following seven activity cost pools:

Activity Cost Pool		Estimated Overhead Cost				Expected Activity
	Labor-related		$	22,000		1,000	direct labor-hours
	Machine-related		$	10,000		8,000	machine-hours
	Machine setups		$	36,000		800	setups
	Production orders		$	29,400		600	orders
	Product testing		$	27,900		900	tests
	Packaging		$	68,400		3,600	packages
	General factory		$	56,800		1,000	direct labor-hours

Required:

1a.

Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)

Activity Cost Pool	Activity Rate
Labor-related		per DLH
Machine-related		per MH
Machine setups		per setup
Production orders		per order
Product testing		per test
Packaging		per package
General factory		per DLH

1b.	Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predetermined overhead rate based on direct labor-hours. (Round your answer to 2 decimal places.)

Predetermined overhead rate

per DLH

Answer 1

1a)	Activity cost pool
				overhead	expected	overhead
				costs	activity	rate
				(a)	(b)	c=a/b
	labor related			22,000	1000	22	per DLH
	machine related			10,000	8,000	1.25	per MH
	machine setups			36,000	800	45	per setup
	production orders			29,400	600	49	per order
	product testing			27,900	900	31	per test
	packaging			68,400	3,600	19	per package
	General factory			56,800	1,000	56.8	per DLH
				250,500
1b)	predetermined overhead rate =				250,500/1000
					250.5