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2 July, 03:10

Fine Industries uses activity-based costing to assist management in setting prices for the company's three major product lines. The following information is available: Activity Cost Pool Estimated Overhead Expected Use of Cost Driver per Activity Cutting 900,000 25,000 labor hours Stitching 8,000,000 320,000 machine hours Inspections 2,800,000 160,000 labor hours Packing 800,000 64,000 finished goods units.

Compute the activity-based overhead rates.

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  1. 2 July, 06:19
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    Cutting 36 per Labor Hour

    Stitching 25 per machine hour

    Inspections 17.5 per labor hour

    Packing 12.5 per finished good

    Explanation:

    cost / cost driver = rate

    Cutting Cost 900,000 / 25,000 labor hours = 36 Rate/DLH

    Stitching Cost 8,000,000 / 320,000 machine hours = 25 rate/MH

    Inspections Cost 2,800,000 / 160,000 labour hours = 17.5 rate / DLH

    Packing Cost 800,000 / 64,000 finished goods = 12.5 rate/FG
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