Management Accounting problem

Management Accounting problem

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Assignment:
HW Set #2 – E3.10, E3.19, E16.16, E16.20
1.
Exercise 3.10
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?
_________________
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 5-8, 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) 19,500 units and (b)
21,600 units.
19,500 Units
21,600 Units
Unit
cost
\$
_________________
\$
_________________
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Unit
fixed
cost
_________________
_________________
Unit
variable
cost
_________________
_________________
The reason the unit costs changed in the way they did is because:
_________________
2.
Exercise 3.19
High-Low Method, Cost Formulas
The controller of the South Charleston plant of Ravinia, Inc., monitored activities associated with
materials handling costs. The high and low levels of resource usage occurred in September and March
for three different resources associated with materials handling. The number of moves is the driver.
The total costs of the three resources and the activity output, as measured by moves for the two
different levels, are presented as follows:
Required:
If required, round your answers to two decimal places. Enter a “0” if required.
1.
Determine the cost behavior formula of each resource. Use the high-low method to assess the
fixed and variable components.
Forklift depreciation:
V
\$ _________________
F
\$ _________________
Y
\$ _________________
Indirect labor:
V
\$ _________________
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