uses activity-based costing to determine the cost of servicing customers. There are three activity pools: guest check-in, room cleaning, and meal service. The activity rates associated with each activity pool are $9 per guest check-in, $15 per room cle

uses activity-based costing to determine the cost of servicing customers. There are three activity pools: guest check-in, room cleaning, and meal service. The activity rates associated with each activity pool are $9 per guest check-in, $15 per room cle

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Description: The Grand Hotel uses activity-based costing to determine the cost of servicing customers. There are three activity pools: guest check-in, room cleaning, and meal service. The activity rates associated with each activity pool are $9 per guest check-in

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 5BE: Activity-based costing for a service business Sterling Hotel uses activity-based costing to...

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Sterling Hotel uses activity-based costing to determine the cost of servicing customers. There are three activity pools: guest check-in, room cleaning, and meal service. The activity rates associated with each activity pool are $8.10 per guest check-in, $24.00 per room cleaning, and $4.00 per served meal (not including food). Tara Stone visited the hotel for a 4-night stay. Tara had 5 meals in the hotel during the visit. Determine the total activity-based cost for Stone's visit during the month. Round your answer to the nearest cent.$fill in the blank 1
ctivity-Based Costing for a Service Business Sterling Hotel uses activity-based costing to determine the cost of servicing customers. There are three activity pools: guest check-in, room cleaning, and meal service. The activity rates associated with each activity pool are $8 per guest check-in, $25 per room cleaning, and $4 per served meal (not including food). Ginny Campbell visited the hotel for a three-night stay. Campbell had three meals in the hotel during her visit. Determine the total activity-based cost for Campbell's visit.
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires 5 people to serve and clean up. Cathy offers two types of parties—an afternoon picnic and an evening formal dinner. The breakdown of the costs follows. Activities (and cost drivers) Afternoon Picnic Formal Dinner Advertising (parties) $ 125 per party $ 125 per party Planning (parties) $ 50 per party $ 144 per party Renting equipment (parties, guests) $ 55 per party plus $13 per guest $ 77 per party plus $24 per guest Obtaining insurance (parties) $ 230 per party $ 375 per party Serving (parties, servers) $ 40 per server per party $ 66 per server per party Preparing food (guests) $ 22 per guest $ 35 per guest Per party costs do not vary with the number of guests. Required: a. Compute the cost of a 20-guest afternoon picnic. b. Compute the cost of a 20-guest evening formal dinner. c. How much…
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires 4 people to serve and clean up. Cathy offers two types of parties an afternoon picnic and an evening formal dinner. The breakdown of the costs follows. Activities (and cost drivers) Afternoon Picnic Formal Dinner Advertising (parties) $ 79 per party $ 79 per party Planning (parties) $ 94 per party $ 108 per party Renting equipment (parties, guests) $ 42 party plus $15 per guest $ 68 per party plus $20 per guest Obtaining insurance (parties) $ 180 per party plus $ 425 per party Serving (parties, servers) $ 58 per server per party $ 69…
Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires 4 people to serve and clean up. Cathy offers two types of parties—an afternoon picnic and an evening formal dinner. The breakdown of the costs follows. Activities (and cost drivers) Afternoon Picnic Formal Dinner Advertising (parties) $ 119 per party $ 119 per party Planning (parties) $ 98 per party $ 134 per party Renting equipment (parties, guests) $ 53 per party plus $14 per guest $ 79 per party plus $23 per guest Obtaining insurance (parties) $ 230 per party $ 370 per party Serving (parties, servers) $ 59 per server per party $ 67 per server per party Preparing food (guests) $ 20 per guest $ 34 per guest Per party costs do not vary with the number of guests. Required: Compute the cost of a 20-guest…
Cathy, the manager of Cathy's Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires 4 people to serve and clean up. Cathy offers two types of parties-an afternoon picnic and an evening formal dinner. The breakdown of the costs follows. Activities (and cost drivers) Advertising (parties) Planning (parties) Renting equipment (parties, guests) Obtaining insurance (parties) Serving (parties, servers) Preparing food (guests) Afternoon Picnic party $ 111 per party $ 86 per $ 58 per party plus $11 per guest $170 per party $43 per server per party $ 18 per guest Complete this question by entering your answers in the tabs below. Required A Per party costs do not vary with the number of guests. Required: a. Compute the cost of a 20-guest afternoon picnic. b. Compute the cost of a 20-guest evening formal dinner. c. How much should Cathy charge for each guest for each type of party if she wants to cover her costs?…
An assisted-living facility provides services in the form of residential space, meals, and other occupant assistance (OOA) to its occupants. The facility currently uses a traditional cost accounting system that charges each occupant a daily rate equal to the facility’s annual cost of providing residential space, meals, and OOA divided by total occupant days. However, an activity-based costing (ABC) analysis has revealed that occupants’ use of OOA varies substantially. This analysis determined that occupants could be grouped into three categories (low, moderate, and high usage of OOA) and that the activity driver of OOA should be nursing hours. The driver of the residential space and meals is occupant days. The following quantitative information was also provided: OccupantCategory AnnualOccupantDays AnnualNursingHours Low usage 36,000 90,000 Medium usage 18,000 90,000 High usage 6,000 120,000…
Sleep Late, a large hotel chain, has been using activity-based costing to determine the cost of a night’s stay at their hotels. One of the activities, “Inspection,” occurs after a customer has checked out of a hotel room. Sleep Late inspects every 10th room and has been using “number of rooms inspected” as the cost driver for inspection costs. A significant component of inspection costs is the cost of the supplies used in each inspection Mary Adams, the chief inspector, is wondering whether inspection labor-hours might be a better cost driver for inspection costs. Mary gathers information for weekly inspection costs, rooms inspected, and inspection labor-hours as follows: Q.Explain why rooms inspected and inspection labor-hours are plausible cost drivers of inspection costs.
Marvin's Kitchen Supply delivers restaurant supplies throughout the city. The firm adds 10 percent to the cost of the supplies to cover the delivery cost. The delivery fee is meant to cover the cost of delivery. A consultant has analyzed the delivery service using activity- based costing methods and identified four activities. Data on these activities follow. Activity Processing order Loading truck Delivering merchandise Processing invoice Total overhead Order value Number of orders Number of items Number of invoices Cost Driver Number of orders Number of items Number of orders Number of invoices Two of Marvin's customers are City Diner and Le Chien Chaud. Data for orders and deliveries to these two customers follow. City Diner Le Chien Chaud $75,000 $90,000 110 1,500 150 Required A Cost Driver Volume 52 600 12 Cost $ 75,000 150,000 90,000 72,000 $387,000 Required B City Diner Le Chien Chaud Driver Volume 5,000 orders 100,000 items Required: a. What would the delivery charge for each…
Sleep Late, a large hotel chain, has been using activity-based costing to determine the cost of a night’s stay at their hotels. One of the activities, “Inspection,” occurs after a customer has checked out of a hotel room. Sleep Late inspects every 10th room and has been using “number of rooms inspected” as the cost driver for inspection costs. A significant component of inspection costs is the cost of the supplies used in each inspection Mary Adams, the chief inspector, is wondering whether inspection labor-hours might be a better cost driver for inspection costs. Mary gathers information for weekly inspection costs, rooms inspected, and inspection labor-hours as follows: Q.Mary expects inspectors to inspect 300 rooms and work for 105 hours next week. Using the cost driver , what amount of inspection costs should Mary budget?
Countryside Bank uses activity-based costing to determine the cost of servicing customers. There are three activity pools: teller transaction processing ($2.55 per teller transaction), check processing (50.10 per canceled check), and ATM transaction processing (50.20 per ATM transaction). Rosa Bush had 5 teller transactions, 10 canceled checks, and 7 ATM transactions during the month. What is the total monthly activity-based cost for Rosa Bush during the month? a $32.90 O b. $15.15 $9.75 4 $24.75
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified three major activities and then completed the first-stage allocations of costs to the activity cost pools. The results appear below. Activity Cost Pool Activity Measure Total Cost Total Activity Serving a party of diners Number of parties served $19,800 6,000 parties Serving a diner Number of diners served $96,250 12,500 diners Serving drinks Number of drinks ordered $36750 10,500 drinks The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries. Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties…