Question 1 (10 points) Freeze Frame, Inc. produces cameras which require three p

Question

Question 1 (10 points) Freeze Frame, Inc. produces cameras which 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 $450,000 Direct materials Direct Labor Department A (7,000 DLHx S21 per DLH) $147,000 Department B (25.000 DLH x $19 per DLH) $475.000 Department C (10,000 DLHx $26 per DLH $260,000 Machine Hours Department A Department B tment C 42.000 MH 23,000 MH 38,000 MH Freeze Frame's total expected overhead costs and related overhead data are shown below Department A DepartmentDepartment 90,000 DLH 75,000 DLH 42.000 DLH 67.500 MH 135,000 MH 53.200 MH $399.000 Direct labor hours Machine hours Manufacturing overhead S540,000 $675,000 costs (a.) Compute a departmental overhead rate for department A based on direct labor 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 direct labor hours. (f.) How much overhead is associated with model 789 from department C? (9) What is the per unit cost of the 550,000 units of model 789

Explanation / Answer

(G) Calculation of Per Unit Cost of Camera Model 789

(a) Calculation of Departmental Overhead rate for Dept. A based on Direct Labour Hours Total Manufacturing Overhead in Department A - 540,000 Total Direct Labour Hours worked in Department A - 90,000 Hours Overhead Rate = 540,000 / 90,000 = $6 per hour (b) Overhead associated with model 789 from department A (based in Direct Labour Hour) = 7,000 * 6 = 42,000 (C) Calculation of Departmental Overhead rate for Dept. B based on Direct Labour Hours Total Manufacturing Overhead in Department B - 675,000 Total Direct Labour Hours worked in Department B - 75,000 Hours Overhead Rate = 675,000 / 75,000 = $9 per hour (D) Overhead associated with model 789 from department B (based in Direct Labour Hour) = 25,000 * 9 = 225,000 (E) Calculation of Departmental Overhead rate for Dept. C based on Direct Labour Hours Total Manufacturing Overhead in Department C - 399,000 Total Direct Labour Hours worked in Department C - 42,000 Hours Overhead Rate = 399,000 / 42,000 = $9.50 per hour (F) Overhead associated with model 789 from department C (based in Direct Labour Hour) = 10,000 * 9.5 = 95,000

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