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 = $616,500 + $1.45X, where X equals number of smokers. Last year, SmokeCity produced 22,500 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) 22,000 units and (b) 24,300 units. Round your answers to the nearest cent.

	22,000 Units	24,300 Units
Unit cost	$	$
Unit fixed cost
Unit variable cost

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

Cost Behavior SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, Smoke City has found that its total annual overhead costs can be represented by the following formula: Overhead cost = $616,500 + $1.45X, where X equals number of smokers. Last year, Smoke City produced 22,500 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 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) 22,000 units and (b) 24,300 units. Round your answers to the nearest cent. 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 rises