Exercise 4-2 (Algo) Compute Activity Rates [LO4-2] [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 Hachine-related Machine setups Production orders Product testing Packaging General factory Estimated Overhead Cost $25,200 $5,000 $ 18,000 $ 29,400 $ 23,000 $ 84,000 $ 60,000 Predetermined overhead rate Expected Activity 2,000 direct labor-hours 5,000 machine-hours per DLH 500 setups 700 orders 1,000 tests Exercise 4-2 Part 2 (Algo) 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.) 3,500 packages 2,000 direct labor-hours i
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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![Exercise 4-2 (Algo) Compute Activity Rates [LO4-2]
[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
Hachine-related
Machine setups
Production orders
Product testing
Packaging
General factory
Estimated
Overhead Cost
$25,200
$5,000
$ 18,000
$ 29,400
$ 23,000
$ 84,000
$ 60,000
Predetermined overhead rate
Expected Activity
2,000 direct labor-hours
5,000 machine-hours
per DLH
500 setups
700 orders
Exercise 4-2 Part 2 (Algo)
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.)
1,000 tests
3,500 packages
2,000 direct labor-hours i](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2dbf05e8-4609-48ee-b8a3-5dc8c1c2617c%2F8185b808-2f1b-4b27-9c05-3bef4728594f%2Ftwh1z7s_processed.jpeg&w=3840&q=75)
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