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?
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?
5. What is the overhead cost per unit produced?
6. What is the fixed overhead cost per unit?
7. What is the variable overhead cost per unit?
8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units. Explain this outcome.