Haskins Company employs material handling employees who move materials between production divisions at a labor cost of

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Question:

Haskins Company employs material handling employees who move materials between production divisions at a labor cost of $360,000 a year. It is estimated that these employees move 600,000 pounds of material per year. If 60,000 pounds are moved in March, how much of the material handling cost should be assigned to products made in March? (Do not round your intermediate calculations.)

a. $38,000

b. $24,000

c. $50,000

d. $36,000

Factory overhead also called manufacturing overhead represents indirect production costs that cannot be directly allocated to the finished products. Manufacturing overhead requires allocation using a predetermined overhead rate or by using the activity-based costing. A formula is used to compute the predetermined overhead rate.