Exercise 3.10 (Algorithmic) Cost Behavior SmokeCity, Inc., manufactures barbeque
ID: 2331634 • Letter: E
Question
Exercise 3.10 (Algorithmic)
Cost Behavior
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 = $567,435 + $1.45X, where X equals the number of smokers. Last year, SmokeCity produced 20,900 smokers. Actual overhead costs for the year were as expected.
Required:
1. What is the driver for the overhead activity?
- Select your answer -Number of flu shotsNumber of movesNumber of smokersNumber of claimsItem 1
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) 20,200 units and (b) 22,400 units. Round your answers to the nearest cent.
The reason the unit costs changed in the way they did is that:
- Select your answer -the relevant range has increased the total fixed costs are increasing the fixed costs are being spread over the different levels of production.the unit variable cost is dropping as production risesItem 14
Exercise 3.10 (Algorithmic)
Cost Behavior
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 = $567,435 + $1.45X, where X equals the number of smokers. Last year, SmokeCity produced 20,900 smokers. Actual overhead costs for the year were as expected.
Required:
1. What is the driver for the overhead activity?
- Select your answer -Number of flu shotsNumber of movesNumber of smokersNumber of claimsItem 1
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) 20,200 units and (b) 22,400 units. Round your answers to the nearest cent.
20,200 Units 22,400 Units Unit cost $ $ Unit fixed cost Unit variable costThe reason the unit costs changed in the way they did is that:
- Select your answer -the relevant range has increased the total fixed costs are increasing the fixed costs are being spread over the different levels of production.the unit variable cost is dropping as production risesItem 14
Explanation / Answer
Answer to Part 1.
Driver for the Overhead is Number of Smokers.
Answer to Part 2.
Overhead Cost = $567,435 + $1.45x
Total Overhead Cost for Last year:
No. of smokers last year = 20,900 smokers
Total Overhead Cost = $567,435 + ($1.45 * 20,900)
Total Overhead Cost = $567,435 + $30,305
Total Overhead Cost = $597,740
Answer to Part 3.
Fixed Overhead Cost incurred last year was $567,435.
Answer to Part 4.
No. of smokers last year = 20,900 smokers
Total Variable Cost = $1.45 * 20,900
Total Variable Cost = $30,305
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