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Active Works Products is a global manufacturing company specializing in athletic wear and sporting goods....

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Accounting

Active Works Products is a global manufacturing company specializing in athletic wear and sporting goods. The company decided to adapt an activity based costing system which has five activity cost pools:

Activity Cost Pool Estimated Overhead Cost Expected Activity
Labor-related $28,000 2,000 direct labor hours (DLH)
Purchase orders $30,000 600 orders
Product testing $27,200 800 tests
Packaging $64,600 3800 packages
General Factory $50,100 2,000 direct labor hours (DLH)

You have been asked to compute the following:

1. Activity rate for each activity cost pool

2. Predetermined overhead rate using the assumption that the company uses a single predetermined overhead rate based on direct labor hours.

3. Write a brief memo to the production supervisor explaining the significance of using direct labor hours as the base for assigning manufacturing overhead costs to products.

Part 1:Activity Rate (round your answers to 2 decimal places)

Part 2:Predetermined Overhead Rate (round your answers to 2 decimal places)

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