The Divine Cheesecake Shoppe is a national bakery that is known for its strawber

Question

The Divine Cheesecake Shoppe is a national bakery that is known for its strawberry cheesecake. It also makes 12 different kinds of cheesecake as well as many other types of bakery items. It has recently adopted an activity-based costing system to assign manufacturing overhead to products. The following data relate to its strawberry cheesecake and the ABC cost pools:


Strawberry Cheesecake:
Annual production 17,700 units
Direct materials per unit $8
Direct labor per unit $5


Cost Pool Cost Cost Driver
Materials ordering $106,600 Number of purchase orders
Materials inspection 77,366 Number of receiving reports
Equipment setup 144,400 Number of setups
Quality control 91,200 Number of inspections
Other
180,630

Direct labor cost
Total mfg. overhead
$600,196



Annual activity information related to cost drivers:


Cost Pool All Products
Strawberry Cheesecake

Materials ordering 8,200 orders 101
Materials inspection 383 receiving reports 61
Equipment setup 3,800 setups 33
Quality control 3,800 inspections 154
Other $2,007,000 direct labor $88,500




Calculate the overhead rate per unit of activity for each of the five cost pools. (Round other cost to 2 decimal places, e.g. 0.50.)

Cost Pools

Overhead rate


Materials ordering $ per order
Materials inspection $ per receiving report
Equipment setup $ per setup
Quality control $ per inspection
Other $ per direct labor cost





Calculate the total overhead assigned to the production of the strawberry cheesecake. (Use rounded amount from the previous question while calculating answer for this question.)

$





Calculate the overhead cost per unit for the strawberry cheesecake. (Round to 2 decimal places, e.g. 5.25.)

$





Calculate the total unit cost for the strawberry cheesecake. (Round answer to 2 decimal places, e.g. 5.25.)

$





Suppose that the Divine Cheesecake Shoppe allocates overhead by a traditional production volume-based method using direct labor dollars as the allocation base and one cost pool. Determine the overhead rate per direct labor dollar and the per unit overhead assigned to the strawberry cheesecake. (Round answer to 4 decimal places, e.g. 0.5525. Use the rounded amount for future calculations.)

Overhead rate per direct labor dollar $
Overhead assigned per unit $

Explanation / Answer

Calculate the overhead rate per unit of activity for each of the five cost pools: Materials ordering: $13 per order ($106,600/ 8,200) Materials inspection: $202 per receiving report ($77,366 / 383) Equipment Setup: $38 per setup ($144,400 / 3,800) Quality Control: $26 per inspection($91,200 / 3,500) Other: $0.09 per direct labor cost($180,630 / $2,007,000) Calculate the total overhead assigned to the production of strawberry cheesecake: $ Materials ordering: $13 x 101 = $1,313 Materials inspection: $202 x 61 = $12,322 Equipment Setup: $38 x 33 = $1,254 Quality Control: $26 x 154 = $4,004 Other: $0.09 x $88,500 = $7965 Total overhead assigned $26,858 ========= Overhead cost per unit = $26,858/ 17,700 = $1.51 Calculate the total unit cost for the strawberry cheesecake: $11.51 DM $6 + DL $4 + OH $1.51 Suppose that the Divine Cheesecake Shoppe allocates overhead by a traditional production volume-based method using direct labor dollars as the allocation base and one cost pool. Determine the overhead rate per direct labor dollar and the per unit overhead assigned to the strawberry cheesecake: Overhead rate per direct labor dollar: $0.29 ($120,400+$77,140+$148,200+$94,500+$180,630) / $2,007,000 $620,870/$2,007,000 = $0.29 Overhead assigned per unit: $1.24 Total overhead assigned = $72,400 x $0.29 = $20996 Overhead assigned per unit =$20996 / 17,700 = $1.18

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