Question

Witness Manufacturing produces two types of cameras: 35mm and digital. The cameras are produced using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows: Product Machine Hours Setups Receiving Orders Packing Orders 35mm 12,000 200 300 500 Digital 12,000 450 1,200 2,500 Costs $70,000 $50,000 $10,000 $30,000 Calculate the total overhead assigned to the 35mm cameras, using only machine hours to calculate a plantwide rate. (Note: Round the plantwide rate to two decimal places.) a.$60,200 b.$72,333 c.$75,130

Answer 1

Answer:

$80,000

Explanation:

For computing the total overhead cost, first we have to compute the plant wide rate which is shown below:

= (Machine hours cost + setup cost + received order cost + packing order cost) ÷ (Total machine hours)

=  ($70,000 + $50,000 + $10,000 + $30,000) ÷ (24,000 machine hours)

=  $160,000 ÷ 24,000 machine hours

=$6.67

Now the total overhead cost equals to

= Machine hours of 35 mm × plant wide rate

= 12,000 machine hours × $6.67

= $80,000