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:
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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.)

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:  
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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.)

Quizplus · Accepted Answer

Total overhead costs = (Cost of machining + Cost of setups + Cost of receiving orders + Cost of packing orders) = $70,000 + $50,000 + $10,000 + $30,000 = $160,000
Total machine hours = (Machine hours for 35 mm cameras + Machine hours for digital cameras) = (12,000 machine hours + 12,000 machine hours) = 24,000 machine hours
Plantwide rate = Total overhead costs / Total machine hours = $160,000 / 24,000 machine hours = $6.67 per machine hour
Overhead assigned to 35mm cameras = (Plantwide rate × Machine hours for 35 mm cameras) = ($6.67 × 12,000 machine hours) = $80,040

Witness Manufacturing Produces Two Types of Cameras: 35mm and Digital