[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 $ 23,200 8,000 direct labor-hours Machine-related $ 5,000 10,000 machine-hours Machine setups $ 36,000 1,200 setups Production orders $ 27,000 600 orders Product testing $ 23,400 900 tests Packaging $ 37,000 3,700 packages General factory $ 54,800 8,000 direct labor-hours Required: 1. Compute the activity rate for each activity cost pool. (

Rustafson Corporation

Activity rates:

Activity Cost Pool              Activity Rates

Labor-related                  $2.90 per direct labor-hour

Machine-related             $0.50 per machine-hour

Machine setups              $30 per setup

Production orders          $45 per order

Product testing               $26 per test

Packaging                       $10 per package

General factory              $6.85 per direct labor-hour

Explanation:

a) Data and Calculations:

Activity Cost Pool  Estimated Overhead Cost  Expected Activity

Labor-related                  $ 23,200                    8,000 direct labor-hours

Machine-related               $ 5,000                   10,000 machine-hours

Machine setups             $ 36,000                      1,200 setups

Production orders         $ 27,000                        600 orders

Product testing             $ 23,400                         900 tests

Packaging                     $ 37,000                       3,700 packages

General factory            $ 54,800                       8,000 direct labor-hours

Activity rates:

Activity Cost Pool  Estimated Overhead Cost  Activity Rates

Labor-related                  $ 23,200/8,000          $2.90/direct labor-hour

Machine-related               $ 5,000/10,000         $0.50/machine-hour

Machine setups             $ 36,000/ 1,200           $30/setup

Production orders         $ 27,000/600               $45/order

Product testing             $ 23,400/900                $26/test

Packaging                     $ 37,000/3,700              $10/package

General factory            $ 54,800/8,000              $6.85/direct labor-hour

c

explanation:

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