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Question
Freeze Frame, Inc. produces cameras that require three processes, A, B, and C, to complete. Digital camera model #789 is the best-selling of all the many types of cameras produced. Information related to the 550,000 units of digital camera model #789 produced annually is shown below:
| Direct materials | $450,000 |
| Direct Labor | |
| Department A (7,000 DLH x $21 per DLH) | $147,000 |
| Department B (25,000 DLH x $19 per DLH) | $475,000 |
| Department C (10,000 DLH x $26 per DLH) | $260,000 |
| Machine Hours | |
| Department A | 42,000 MH |
| Department B | 23,000 MH |
| Department C | 38,000 MH |
Freeze Frames total expected overhead costs and related overhead data are shown in the following table:
| Department A | Department B | Department C | |
| Direct labor hours | 90,000 DLH | 75,000 DLH | 42,000 DLH |
| Machine hours | 67,500 MH | 135,000 MH | 53,200 MH |
| Manufacturing overhead costs | $540,000 | $675,000 | $399,000 |
a. Compute a departmental overhead rate for department A based on machine hours.
b. How much overhead is associated with model 789 from department A?
c. Compute a departmental overhead rate for department B based on direct labor hours.
d. How much overhead is associated with model 789 from department B?
e. Compute a departmental overhead rate for department C based on machine hours.
f. How much overhead is associated with model 789 from department C?
g What is the per unit cost of the 550,000 units of model 789?
Answer
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