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 $ 22,000 1,000 direct labor-hours Machine-related $ 10,000 8,000 machine-hours Machine setups $ 36,000 800 setups Production orders $ 29,400 600 orders Product testing $ 27,900 900 tests Packaging $ 68,400 3,600 packages General factory $ 56,800 1,000 direct labor-hours Required:
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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 |
Expected Activity | |
|---|---|---|---|
| Labor-related | $ 22,000 | 1,000 | direct labor-hours |
| Machine-related | $ 10,000 | 8,000 | machine-hours |
| Machine setups | $ 36,000 | 800 | setups |
| Production orders | $ 29,400 | 600 | orders |
| Product testing | $ 27,900 | 900 | tests |
| Packaging | $ 68,400 | 3,600 | packages |
| General factory | $ 56,800 | 1,000 | direct labor-hours |
Required:
1. Compute the activity rate for each activity cost pool. (Round your answers to 2 decimal places.)
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