Evergreen Inc. expects to manufacture 4,000 refrigerators during the last quarter of the current year. The company uses activity-based costing to determine the product costs. The manufacturing activities and associated information is provided in the table below. Manufacturing Activities and Associated Information Overhead activities Overhead costs assigned ($) Number of cost driver Material handling 120,000 240,000 Parts Devising 400,000 50,000 Machine hours (MH) Assembling 168,000 240,000 Parts Finishing 240,000 4,000 Finishing hours (FH) Each refrigerator uses 30 parts and requires 5 machine hours and 1 finishing hour during the production process. The direct material costs and direct labor costs required for each refrigerator is $500 and $90, respectively. What would be the overhead rate per finishing hour (FH)? (Round your answer to two decimal points) Group of answer choices $8.00 per FH $0.70 per FH $60.00 per FH $0.50 per FH
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Evergreen Inc. expects to manufacture 4,000 refrigerators during the last quarter of the current year. The company uses activity-based costing to determine the product costs. The manufacturing activities and associated information is provided in the table below.
Manufacturing Activities and Associated Information| Overhead costs assigned ($) | Number of cost driver | |
|---|---|---|
| Material handling | 120,000 | 240,000 Parts |
| Devising | 400,000 | 50,000 Machine hours (MH) |
| Assembling | 168,000 | 240,000 Parts |
| Finishing | 240,000 | 4,000 Finishing hours (FH) |
Each refrigerator uses 30 parts and requires 5 machine hours and 1 finishing hour during the production process. The direct material costs and direct labor costs required for each refrigerator is $500 and $90, respectively. What would be the overhead rate per finishing hour (FH)? (Round your answer to two decimal points)
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