Question

Compute the activity rate for each activity cost pool.

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 $ 19,600 $ 7,000 $ 23,400 $ 16,500 $ 22,400 $ 62,900 $ 60,000 Expected Activity 10,000 direct labor-hours 7,000 machine-hours 600 setups 500 orders 800 tests 3,700 packages 10,000 direct labor-hours Required: 1. Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Cost Pool Labor-related Machine-related Machine setups Production orders Product testing Packaging General factory Activity Rate per DLH per MH per setup per order per test per package per DLH

Answer 1

Activity cost pool	Estimated overhead cost	Expected activity	Activity rate
Labor related	$19,600	10,000 direct labor hours	19,600/10,000 = $1.96 per direct labor hour
Machine related	$7,000	7,000 machine hours	7,000/7,000 = $1 per machine hour
Machine setups	$23,400	600 setups	23,400/600 = $39 per setup
Production orders	$16,500	500 orders	16,500/500 = $33 per order
Product testing	$22,400	800 tests	22,400/800 = $28 per test
Packaging	$62,900	3,700 packages	62,900/3,700 = $17 per package
General factory	$60,000	10,000 direct labor hours	60,000/10,000 = $6 per direct labor hour

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