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:

Required:
1. Compute the activity rate for each of the activity cost pools.
2. The expected activity for the year was distributed among the company's four products as follows

Using the ABC data, determine the total amount of overhead cost assigned to each product.
3. Assume that prior to implementing ABC, Rusties used a conventional cost system that applied all manufacturing overhead to products based on direct labor-hours. Explain how the conventional overhead cost assignments would differ from the activity-based cost assignments with respect to Product B.

Activity Measure Expected Overhead Cost Expected Activity Activity Cost Pool $18,000 $1,050 $3,500 $700 $50,000 Labor-related Purchase orders.. _ .. . . Direct labor-hours Number of orders Number of tests Number of templates Machine-hours 2,000 DLHs 525 orders 350 tests . 28 templates 10,000 MHs Expected Activity Activity Cost Pool Product A Product B Product C Product D 500 80 200 0 3,400 100 105 60 14 2,200 700 180 0 10 1,800 700 160 90 4 2,600 Product testing (tests)