Question

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 $ 24,400 4,000 direct labor-hours Machine-related $ 5,000 5,000 machine-hours Machine setups $ 13,200 400 setups Production orders $ 24,500 500 orders Product testing $ 34,100 1,100 tests Packaging $ 46,800 3,900 packages General factory $ 49,600 4,000 direct labor-hours 2. 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.)

Answer 1

the predetermined overhead rate is $49.40

Step-by-step explanation:

The computation of the predetermined overhead rate is shown below:

= Total estimated overhead ÷ estimated direct labor hours

= ($24,400 + $5,000 + $13,200 + $24,500 + $34,100 + $46,800 + $49,600) ÷ (4,000 direct labor hours)

= $49.40

Hence, the predetermined overhead rate is $49.40