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$450,000Direct 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)$260,000Machine Hours? Department A42,000 MH Department B23,000 MH Department C38,000 MHFreeze Frame's total expected overhead costs and related overhead data are shown in the following table:?Department ADepartment BDepartment CDirect labor hours90,000 DLH75,000 DLH42,000 DLHMachine hours67,500 MH135,000 MH53,200
MHManufacturing overhead costs$540,000$675,000$399,000a. 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?
What will be an ideal response?
a. $540,000/67,500 MH = $8 per MH
b. ($8/hr)(42,000 MH) = $336,000
c. $675,000/75,000 DLH = $9 per DLH
d. ($9/hr)(25,000 DLH) = $225,000
e. $399,000/53,200 MH = $7.50 per MH
f. ($7.50/hr)(38,000 MH) = $285,000
g ($450,000 + $147,000 + $475,000 + $260,000 + $336,000 + $225,000 + $285,000)/550,000 units = $3.96 per unit
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