Cost Behavior SmokeCity Inc manufactures barbeque smokers Ba

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 $543,000 + $1.34X, where X equals number of smokers. Last year, smokecity produced 20,000 smokers, Actual overhead costs for the year were as expected. Required: 1. What is the driver for the overhead activity? Number of smokers 2. What is the total overhead cost incurred by SmokeCity last year? 569,800 3. What is the total fixed overhead cost incurred by SmokeCity last year? 543,000 4. What is the total variable overhead cost incurred by SmokeCity last year? 26,800 V

Solution

Number of smokers 19500 21600 1) unit cost fixed cost 543000 543000 variable cost(1.34*number of smokers) 26130 28944 Total cost 569130 571944 unit cost(total cost/number of smokers) 29.18615 26.47889 2) Unit varible cost(variable cost/number of smokers) 1.34 1.34