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 = $583,150 + $1.26X, where X equals number of smokers. Last year, SmokeCity produced 21,800 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 SmokeCity last year? $fill in the blank 2 3. What is the total fixed overhead cost incurred by SmokeCity last year?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Cost Behavior
SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual
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?
$fill in the blank 2
3. What is the total fixed overhead cost incurred by SmokeCity last year?
$fill in the blank 3
4. What is the total variable overhead cost incurred by SmokeCity last year?
$fill in the blank 4
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?
$fill in the blank 5 per unit
6. What is the fixed overhead cost per unit?
$fill in the blank 6 per unit
7. What is the variable overhead cost per unit?
$fill in the blank 7 per unit
8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 21,200 units and (b) 23,100 units. Round your answers to the nearest cent.
| 21,200 Units | 23,100 Units | |
|---|---|---|
| Unit cost | $fill in the blank 8 | $fill in the blank 9 |
| Unit fixed cost | fill in the blank 10 | fill in the blank 11 |
| Unit variable cost | fill in the blank 12 | fill in the blank 13 |
The reason the unit costs changed in the way they did is because:
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