is a nati ctivity-Based Costing LO 21 The Cheesecake Shoppe nown for its strawbe
ID: 2517927 • Letter: I
Question
is a nati ctivity-Based Costing LO 21 The Cheesecake Shoppe nown for its strawberry cheesecake. It makes 12 different kinds of other types of bakery items. It has recently adopted manufacturing overhead to products. The following data relate to its strawbers system to assi the ABC cost pools: cheesecake as well as many activity-based costing system to assign PROBLEM Strawberry Cheesecake: Annual production Direct materials per unit Direct labor per unit 19,500 units $10 $2 Cost Cost Driver Cost Pool Materials ordering Materials inspection Equipment setup Quality control Other Total manufacturing overhead s 72,000 75,000 105,000 69,000 100,000 $421,000 Number of purchase orders Number of receiving reports Number of setups Number of inspections Direct labor cost Annual activity information related to cost drivers: Strawberry Cheesecake Cost Pool All Products 100 60 30 150 $39,000 8,000 orders Materials ordering Materials inspection Equipment setup Quality control Other 375 receiving reports 3,000 setups 3,000 inspections $2,000,000 direct labor REQUIRED a. Calculate the overhead rate b. Calculate the total overhead assigned to the production of the strawberry cheesecake. per unit of activity for each of the five cost pools. c. Calculate the overhead cost per unit for the strawberry cheesecake. Round to three places. d. Calculate the total unit cost for the strawberry cheesecake. Round to t e. Suppose that the Cheesecake Shoppe allocates overhead by a traditional production method using direct labor dollars as the allocation base and one cost pool. Determ Discuss the difference in cost allocations between the traditional method head rate per direct labor dollar and the per unit overhead assigned to the straveactivily-based hesecake costing approach. Round to three decimal places.Explanation / Answer
Solution a:
Solution b:
Solution c:
Overhead cost per unit for strawberry cheese cake = Allocated overhead / Nos of units
= $17,400 / 19500 = $0.892 per unit
Solution d:
Total unit cost for strawberry cheesecake = Direct material cost per unit + Direct labor cost per unit + Overhead cost per unit
= $10 + $2 + $0.892 = $12.892 per unit
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Compuatation of Activity rate Cost Pool Total Cost Allocation base Qty of allocation base Allocation rate Material ordering $72,000.00 Nos of orders 8000 $9.00 Material inspection $75,000.00 receiving reports 375 $200.00 Equipment setup $105,000.00 Setups 3000 $35.00 Quality control $69,000.00 Inspections 3000 $23.00 Others $100,000.00 Direct labor $2,000,000.00 $0.05 Total $421,000.00Related Questions
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