Activity Cost Pool	Activity Rate
Labor-related		per DLH
Machine-related		per MH
Machine setups		per setup
Production orders		per order
Product testing		per test
Packaging		per package
General factory		per DLH

2.

Required information

[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	$	19,600		10,000	direct labor-hours
Machine-related	$	7,000		7,000	machine-hours
Machine setups	$	23,400		600	setups
Production orders	$	16,500		500	orders
Product testing	$	22,400		800	tests
Packaging	$	62,900		3,700	packages
General factory	$	60,000		10,000	direct labor-hours

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.

Pacifica Industrial Products Corporation makes two products, Product H and Product L. Product H is expected to sell 49,000 units next year and Product L is expected to sell 9,800 units. A unit of either product requires 0.6 direct labor-hours.

The company's total manufacturing overhead for the year is expected to be $2,998,800.

Required:

1-a. The company currently applies manufacturing overhead to products using direct labor-hours as the allocation base. If this method is followed, how much overhead cost per unit would be applied to each product?

1-b. Compute the total amount of overhead cost that would be applied to each product.

2. Management is considering an activity-based costing system and would like to know what impact this change might have on product costs. For purposes of discussion, it has been suggested that all of the manufacturing overhead be treated as a product-level cost. The total manufacturing overhead would be divided in half between the two products, with $1,499,400 assigned to Product H and $1,499,400 assigned to Product L.

If this suggestion is followed, how much overhead cost per unit would be assigned to each product?