Kramer corporation is a diversified manufacturer of consumer goods. The company activity based costing system has the following seven activity cost pools :
Activity Cost Pool : Estimated overhead cost: Expected Activity :
Labor related 48000 20000 direct labor hours
Machine related 67500 45000 Machine hours
Machine setups 84000 600 setup
Production orders 112000 400 orders
Product testing 58500 900 tests
Packaging 0 90000 6000 packages
General factory 672000 20000 direct labor hours
Require:
1) Compute the activity rate for each activity cost pool
2) Compute the company's predetermined overhead rate, assuming that the company uses a single plant wide determined overhead rate based on direct labor hours.