I suppose thats how were able to hold down the price

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“I agree that automation is very beneficial,” replied Melissa. “I suppose that's how we're able to hold down the price of the BB8. Trekkie Corporation in the UK tried to bring out a BB8 but discovered they couldn't come close to matching our price. But Trekkie is killing us on the R2D2 by undercutting our price with some of our best customers. I suppose they'll pick up all of our R2D2 business if we move out of that market. But who cares? We don't even have to advertise the BB8; it just seems to sell itself.” “My only concern about automation is how our manufacturing overhead rate has shot up,” said Justin. “Our total manufacturing overhead cost is $2,700,000. That comes out to be a hefty amount per direct labour hour, but Timothy down in accounting has been using direct labour hours as the base for computing overhead rates for years and doesn't want
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to change. I don't suppose it matters as long as costs get assigned to products.” “I've never understood that debit and credit stuff,” replied Melissa. “But I think you've got a problem in production. I had lunch with Lily yesterday and she complained about how complex the BB8 is to produce. Apparently they have to do a lot of setups, special soldering, and other work on the BB8 just to keep production moving. And they have to inspect every single unit.” “It'll have to wait,” said Justin. “I'm writing a proposal to the board of directors to phase out the R2D2. We've got to increase our bottom line or we'll all be looking for jobs.” Compute the predetermined overhead rate based on direct labour hours that the company used during the year. (There
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