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 = $530,640 + $1.42X, where X equals number of smokers. Last year, Smoke City produced 19,800 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 Smoke City last year? 3. What is the total fixed overhead cost incurred by Smoke City last year? 4. What is the total variable overhead cost incurred by Smoke City 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) 19.100 units and (b) 21,400 units. Round your answers to the nearest cent. 19,100 Units 21.400 Units Unit cost Unit fixed cost

Answer 1

1)	No. of units
2)	Total Overhead Cost =			$ 530640 + $ 1.42 (19800)
			=	$ 558,756.00
3)	Total Fixed OH cost		=	$ 530,640.00
4)	Total variable cost		=	$ 1.42 x 19800
			=	$   28,116.00
5)	OH cost per unit		=	$ 558756 / 19800
			=	$           28.22
6)	Fixed OH cost per unit		=	$ 530640 / 19800
			=	$           26.80
7)	Variable OH cost per unit		=	$             1.42

8)
		19100 units	21400 units
Unit Cost		$       29.25	$       26.11
Unit fixed cost		$       27.78	$       24.80
Unit variable cost		$         1.42	$         1.42