The Espresso Cheesecake Shoppe is a national bakery that is known for its strawb

Question

The Espresso 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 19,100 units Direct materials per unit $9 Direct labor per unit $3 Cost Pool Cost Cost Driver Materials ordering $73,000 Number of purchase orders Materials inspection 75,250 Number of receiving reports Equipment setup 99,330 Number of setups Quality control 63,210 Number of inspections Other 127,400 Direct labor cost Total manufacturing overhead $438,190
Annual activity information related to cost drivers:
Cost Pool All Products Strawberry Cheesecake Materials ordering 7,300 orders 90 Materials inspection 350 receiving report 6 Equipment setup 3,010 setups 3 Quality control 3,010 inspections 170 Other $1,820,000 direct labor $57,300

Explanation / Answer

Materials ordering= cost/ no of purchase orders= 73000/7300=$10
Materials inspection= cost/no of reports=75250/350=$215
Equipment setup=cost/no of setup=99,330/3010=33
Quality control=cost/no of inspection=63210/3010=$21
Other=cost/no of direct= 127,400/1820000=0.07

Total overhead for strawberry cheese cake
=(10*90)+(215*6)+(33*3)+(21*170)+(0.07*57300)
=9870

overhead cost per unit= 9870/19100=0.517

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