97%(33)32 out of 33 people found this document helpful
This preview shows page 1 - 2 out of 13 pages.
Cost BehaviorRequired:# Of SmokersFor questions 2-4, Enter the final answers rounded to the nearest dollar.Overhead = 543,000+ 1.34(20,000)569800543,000268001.34(20,000)For questions 5-8, round your answers to the nearest cent. 28.49 Per Unit=543,000+1.34(20,000)/20,00027.15 Per Unit=543,000/20,0001.34 Per Unit19,500 21,600 Unit cost56913029.1957194426.48Unit fixed cost27.8525.14Unit variable cost1.341.34The reason the unit costs changed in the way they did is because:When the units of production dropped the fixed costs weren't spread out as much so the price per unit iWhen the units of production increased the fixed costs were spread out more and the price per unit decExercise 3.10SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that ioverhead costs can be represented by the following formula: Overhead cost = $543,000 + $1.34X, wheresmokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as exp1. What is the driver for the overhead activity?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?