Problem
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 vs. Cost Expected Activity
Labor-related $ 28,000 2,000 direct labor-hours
Machine-related $ 5,000 10,000 machine-hours
Machine setups $ 45,000 1,000 setups
Production orders $ 30,000 600 orders
Product testing $ 27,200 800 tests
Packaging $ 64,600 3,800 packages
General factory $ 51,200 2,000 direct labor-hours
Required: 1. Compute the activity rate for each activity cost pool.
Labor-related
Machine-related
Machine setups
Production orders
Product testing
Packaging
General factory
2. Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predetermined overhead rate based on direct labor-hours.