Question

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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	$	28,000		5,000	direct labor-hours
Machine-related	$	2,500		5,000	machine-hours
Machine setups	$	34,300		700	setups
Production orders	$	13,800		300	orders
Product testing	$	12,000		600	tests
Packaging	$	57,000		3,800	packages
General factory	$	60,000		5,000	direct labor-hours

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

2.

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	Estimated Overhead Cost			Expected Activity
Labor-related	$	28,000		5,000	direct labor-hours
Machine-related	$	2,500		5,000	machine-hours
Machine setups	$	34,300		700	setups
Production orders	$	13,800		300	orders
Product testing	$	12,000		600	tests
Packaging	$	57,000		3,800	packages
General factory	$	60,000		5,000	direct labor-hours

Compute the company's predetermined overhead rate, assuming that the company uses a single plantwide predetermined overhead rate based on direct labor-hours.

3.

Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates:

Activity Cost Pool	Activity Rates
Labor-related	$	7.00	per direct labor-hour
Machine-related	$	7.00	per machine-hour
Machine setups	$	30.00	per setup
Production orders	$	200.00	per order
Shipments	$	140.00	per shipment
General factory	$	7.00	per direct labor-hour

  

Cost and activity data have been supplied for the following products:

  

	J78				B52
Direct materials cost per unit	$	5.50			$	32.00
Direct labor cost per unit	$	4.75			$	9.00
Number of units produced per year		4,000				100

	Total Expected Activity
		J78			B52
Direct labor-hours		1,200			30
Machine-hours		2,200			50
Machine setups		6			1
Production orders		5			1
Shipments		7			1

Required:

Compute the unit product cost of each product listed above. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

(212 Activity Rate = Eshmated De Estimated Duellhead lost 125 Expected Activity 30 • Labor Related 280DD 5000 $5.6 per DLH. machine selated 2500 5000 $ 0.5 per m u machine Setup 34300 700 = $49 per setup Production order = 13800 300 = $46 per order Produt testing = 12000 Goo & 20 per test Packaging = 57000 3800 & 15 per package

General factory = 60,000 SODD E$12 per DLH the (2) Predetermined bases of overhead rate on direct Labor hour Overhead rate Total overhead Total Direct Labor bour 207600 5000 = $41.52 per DLH (3) Manufaitwing cost using Activity based costing Activity B52 Rates 210. 350 30 178 8400 15 400 180 looo. 980. 8.400 Labor Related machine related machine setup Production orders Shipments General factory. 30. 200 140 200 140 210 Total manufacturing cost Divide by number of units Manufacturing cost per 34360 4000 1140 100 8.59 111.4 unit

Unit Pood wit lost Dirut Material Direct Labor Manufacturing overhead J78 B52 5.5 32 4.75 9 8.59 1104 Unit produit cost 118.84 1 52.4 ini
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