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 the following seven activity cost pools: Activity Cost Pool Labor-related Machine-related Machine setups Production orders Product testing Packaging General factory Exercise 4-2 Part 1 (Algo) Activity Cost Pool Labor-related Machine-related Estimated Overhead Cost $ 17,200 $4,000 $ 18,000 $ 10,500 $ 27,600 $ 62,900 $ 57,600 Machine setups Production orders Product testing Packaging General factory Required: 1. Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal place Activity Rate per DLH per MH per setup per order Expected Activity 4,000 direct labor-hours 8,000 machine-hours per test per package per DLH 500 setups 300 orders 1,200 tests 3,700 packages 4,000 direct labor-hours

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 the following seven activity cost pools: Activity Cost Pool Labor-related Machine-related Machine setups Production orders Product testing Packaging General factory Exercise 4-2 Part 1 (Algo) Activity Cost Pool Labor-related Machine-related Estimated Overhead Cost $ 17,200 $4,000 $ 18,000 $ 10,500 $ 27,600 $ 62,900 $ 57,600 Machine setups Production orders Product testing Packaging General factory Required: 1. Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal place Activity Rate per DLH per MH per setup per order Expected Activity 4,000 direct labor-hours 8,000 machine-hours per test per package per DLH 500 setups 300 orders 1,200 tests 3,700 packages 4,000 direct labor-hours

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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TB Problem 5-163 (Algo) Roadmaster Tires produces a variety... Roadmaster Tires produces a variety of auto and truck tires at its Indianapolis manufacturing plant. The plant is highly automated and uses an activity-based costing system to allocate overhead costs to its various product lines. The costs and cost drivers associated with four activity cost pools are given below: Activities: Cost Cost Driver Unit Level $88,400 5,200 labor hours Batch Level $66,000 220 setups Production of 1,000 units of a small tractor tire required 320 labor hours and two setups and consumed 20% of the product sustaining activities. a. Overhead allocated using company-wide allocation base b. Overhead allocated under activity-based costing e-1. Selling price per unit under direct labor hours approach 0-2. Selling price per unit under activity-based costing Product Level $30,000 % of use Required: a. Instead of using ABC, suppose the company had used labor hours as a company-wide allocation base. How much…
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Station 9 ¾ Corporation manufacturers railroad tracks. They are currently using a traditional system, with machine hours as the cost driver. They are considering converting to an ABC system, and want a comparison of the two. Station 9 ¾ has identified the following activity information: Activity Cost Driver Est. Cost Driver Volume Est. Cost Pool Machining Machine Hours 12,000 $119,000 Assembly Direct Labor Hours 15,800 $107,000 Setup Number of Setups 9 $24,300 Total $250,300 The actual cost driver volume that occurred during the production process is below: Machine Hours 8,600 Direct Labor Hours 9,700 Number of Setups 7 What is the Difference between traditional and ABC system?
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question 3-5
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