Use This Information for Swan Company to Answer the Questions

question 24

Multiple Choice

Use this information for Swan Company to answer the questions that follow.

Swan Company produces a product at a total cost of $43 per unit. Of this amount, $8 per unit is selling and administrative costs. The total variable cost is $30 per unit, and the desired profit is $20 per unit.
-What is the activity rate for general overhead?

• A) $4.00 per direct labor hour
• B) $60.00 per direct labor hour
• C) $6.67 per direct labor hour
• D) $10.00 per direct labor hour

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Definitions:

Inventory Costing Method

A system used to value inventory, such as First-In, First-Out (FIFO) or Last-In, First-Out (LIFO), impacting the calculation of cost of goods sold and ending inventory.

LIFO

Last In, First Out; an inventory valuation method where the last items placed in inventory are the first ones to be used or sold.

Ending Inventory

The total value of a business’s merchandise, raw materials, and products not yet sold at the end of an accounting period.

FIFO

"First In, First Out," an inventory valuation method where goods first acquired are the first to be sold, used in accounting to calculate the cost of goods sold.