Question
INDIANA CORPORATION is a bakery that is known for its strawberry cheesecake. It also makes 12 different kinds of cheesecake as well as many other
INDIANA CORPORATION
is a 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. The company uses normal costing with direct-labor dollars as their base for allocating overhead to its various bakery products.
The company estimates overhead for the upcoming year of $421,000 and estimates direct labor of $2,000,000.
The following estimated information is available for their Strawberry Cheesecake product:
Annual production | 17,500 units |
Direct materials per unit | $6 |
Direct labor per unit | $2 |
Required:
- Compute the predetermined rate (overhead per dollar of labor) Round this to TWO decimal places
- Determine the amount of estimated overhead applied to one unit of strawberry cheesecake (one cake) AND the estimated amount of overhead to be applied to that product line for the year
- What is the total estimated unit cost of the strawberry cheesecake?
NOW consider the following additional information about the estimated overhead of $421,000. You have analyzed this amount, and determined that the following breakdown and have identified appropriate activities that appear to cause, or drive these costs, as follows:
|
ASSUME that the following amounts of various cost drivers will be used for all products and for the Strawberry Cheesecake product:
|
|
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started