Question

Required information (The following information applies to the questions displayed below.) 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 Labor-related Machine-related Machine setups Production orders Product testing Packaging General factory Estimated Overhead Cost $ 18,400 $ 5,000 $ 46,800 $ 23,000 $ 27, 200 $ 39,600 $ 51,600 Expected Activity 2,000 direct labor-hours 10,000 machine-hours 1,200 setups 500 orders 800 tests 3,600 packages 2,000 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.) Predetermined overhead rate per DLH

Answer 1

Pre-determined overhead rate    [Refer working note 1]

$105.80

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Working note 1 - Calculation of pre-determined overhead rate
Total overhead cost                    [Refer working note 2]         (a)	$211,600
Total direct labor hours                                                           (b)	2000
predetermined overhead rate                                                      (a / b)	$105.80

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Working note 2 - Calculation of total overhead
Activity Cost Pool	Estimated Overhead Cost
Labor-related	$18,400
Machine-related	$5,000
Machine setups	$46,800
Production orders	$23,000
Product testing	$27,200
Packing	$39,600
General factory	$51,600
Total overhead cost	$211,600