Discuss the below:
Q: 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 |
|
$ |
18,400 |
|
2,000 |
direct labor-hours |
|
Machine-related |
|
$ |
5,000 |
|
10,000 |
machine-hours |
|
Machine setups |
|
$ |
46,800 |
|
1,200 |
setups |
|
Production orders |
|
$ |
23,000 |
|
500 |
orders |
|
Product testing |
|
$ |
27,200 |
|
800 |
tests |
|
Packaging |
|
$ |
39,600 |
|
3,600 |
packages |
|
General factory |
|
$ |
51,600 |
|
2,000 |
direct labor-hours |
Compute the activity rate for each activity cost pool.
| 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 |