The Cheesecake Shoppe is a national bakery that is known for its strawberry cheesecake. It makes 12 different kinds of cheesecake as well as many other types of bakery items. It has recently adopted an activity-based costing system to assign manufacturing overhead to products. The following data relate to its strawberry cheesecake and the ABC cost pools:

Strawberry Cheesecake:

Annual production ..............................19,500 units

Direct materials per unit ..................................$10

Direct labor per unit ........................................$2

Annual activity information related to cost drivers:

Required
a. Calculate the overhead rate per unit of activity for each of the five cost pools.
b. Calculate the total overhead assigned to the production of the strawberry cheesecake.
c. Calculate the overhead cost per unit for the strawberry cheesecake. Round to three decimal places.
d. Calculate the total unit cost for the strawberry cheesecake. Round to three decimal places.
e. Suppose that the Cheesecake Shoppe allocates overhead by a traditional production volume- based method using direct labor dollars as the allocation base and one cost pool. Determine the overhead rate per direct labor dollar and the per unit overhead assigned to the strawberry cheesecake.
Discuss the difference in cost allocations between the traditional method and the activity-based costing approach. Round to three decimal places.
 

Transcribed Image Text:

Cost Pool Cost Cost Driver $ 72,000 Materials ordering Materials inspection Number of purchase orders Number of receiving reports Number of setups Number of inspections 75,000 Equipment setup Quality control 105,000 69,000 Other 100,000 Direct labor cost Total manufacturing overhead $421,000 Cost Pool Cost Cost Driver $ 72,000 Materials ordering Materials inspection Number of purchase orders Number of receiving reports Number of setups Number of inspections 75,000 Equipment setup Quality control 105,000 69,000 Other 100,000 Direct labor cost Total manufacturing overhead $421,000

Answer rating: 100% (QA)

Required solution of all parts is given below No of Strawberry Cheesescake 1750000 ... View the full answer