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 $ 26,800 5,000 direct labor-hours Machine-related $ 4,500 9,000 machine-hours Machine setups $ 41,800 1,100 setups Production orders $ 17,000 500 orders Product testing $ 15,500 500 tests Packaging $ 51,000 3,400 packages General factory $ 52,400 5,000 direct labor-hours Exercise 4-2 Part 1 Required: 1. Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)

Answer 1

Labor-related $5.36

Machine-related $0.5

Machine setups $38

Production orders $34

Product testing $31

Packaging $15

General factory $10.48

Step-by-step explanation:

Computation for the activity rate for each activity cost pool using this formula

Activity rate =Estimated cost / Estimated activity

Let plug in the formula

Labor-related $ 26,800/5,000=$5.36

Machine-related $ 4,500/9,000=$0.5

Machine setups $ 41,800/1,100 =$38

Production orders $ 17,000/500=$34

Product testing $ 15,500/500 =$31

Packaging $ 51,000/3400=$15

General factory $ 52,400/5000=$10.48

Therefore the activity rate for each activity cost pool are:

Labor-related $5.36

Machine-related $0.5

Machine setups $38

Production orders $34

Product testing $31

Packaging $15

General factory $10.48