Question

SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = $576,730 + $1.31X, where X equals number of smokers. Last year, SmokeCity produced 21,400 smokers. Actual overhead costs for the year were as expected.

Required:

1. What is the driver for the overhead activity?

For questions 2-4, Enter the final answers rounded to the nearest dollar.

2. What is the total overhead cost incurred by SmokeCity last year?

$

3. What is the total fixed overhead cost incurred by SmokeCity last year?

$

4. What is the total variable overhead cost incurred by SmokeCity last year?

$

For questions 5-7, round your answers to the nearest cent. Use those rounded figures in subsequent computations, if necessary.

5. What is the overhead cost per unit produced?

$ per unit

6. What is the fixed overhead cost per unit?

$ per unit

7. What is the variable overhead cost per unit?

$ per unit

8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 21,100 units and (b) 22,600 units. Round your answers to the nearest cent.

21,100 Units 22,600 Units

Unit cost $ $

Unit fixed cost

Unit variable cost

The reason the unit costs changed in the way they did is because:

Answer 1

	.
	1. What is the driver for the overhead activity?
	number of smokers.
	2. What is the total overhead cost incurred by SmokeCity last year?
	=$576730 +($1.31*21400 smokers)
	=$576730+28034
	$                                       6,04,764
	3. What is the total fixed overhead cost incurred by SmokeCity last year?
	=$576730
	4. What is the total variable overhead cost incurred by SmokeCity last year?
	=$1.31*21400 smokers
	$                                           28,034
	5. What is the overhead cost per unit produced?
	=$604764/21400
	=$28.26
	6. What is the fixed overhead cost per unit?
	=$576730/21400
	=$26.95
	7. What is the variable overhead cost per unit?
	Given
	=$1.31 per unit
	8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 21,100 units and (b) 22,600 units.
		21100	22600
a	Number Of Units	21100	22600
b	Fixed overhead	$         5,76,730	$         5,76,730
c	Variable cost (a*$1.31)	$       27,641.00	$       29,606.00
d	total cost	$   6,04,371.00	$   6,06,336.00
e	unit cost (d/a)	$               28.64	$               26.83
f	unit fixed cost (b/a)	$               27.33	$               25.52
g	unit variable cost	1.31	1.31