[The following information applies to the questions displayed below.] Rusties Co

Question

[The following information applies to the questions displayed below.] Rusties Company recently implemented an activity-based costing system. At the beginning of the year, management made the following estimates of cost and activity in the company's five activity cost pools: Activity Cost Pool Labor-related Purchase orders Product testing Template etching General factory Expected Overhead Cost $24,905 $840 $ 7,600 $ 1,080 $ 46,750 Activity Measure Expected Activity Direct labor-hours Number of orders Number of tests Number of templates Machine-hours 1,465 DLHs 420 orders 400 tests 40 templates 9,350 MHs value: 10.00 points Required 1. Compute the activity rate for each of the activity cost pools Activity Cost Labor-related Purchase orders Product testing Template etching General factory Activity Rate Pool per DLH per order per test per template per MH

Explanation / Answer

Activity cost pool Activity rate Labor related(24905/1465) $17 per DLH Purchase orders(840/420) $2 per order Product testing(7600/400) $19 per test Template etching(1080/40) $27 per template General factory(46750/9350) $5 per MH

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