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.

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Regression, activity-based costing, choosing cost drivers. 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 signicant component of inspection costs is the cost of the supplies used in each inspection.

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 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) $ 81 per party $ 81 per party Planning (parties) $ 54 per party $ 124 per party Renting equipment (parties, guests) $ 49 per party plus $12 per guest $ 71 per party plus $23 per guest Obtaining insurance (parties) $ 220 per party $ 355 per party Serving (parties, servers) $ 58 per server per party $ 70 per server per party Preparing food (guests) $ 18 per guest $ 31 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) $ 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…

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Thayne Company has 30 clerks that work in its Accounts Payable Department. A study revealed the following activities and the relative time demanded by each activity: Required: Classify the four activities as value-added or non-value-added, and calculate the clerical cost of each activity. For non-value-added activities, indicate why they are non-value-added.

Activity-based costing: selling and administrative expenses Jungle Junior Company manufactures and sells outdoor play equipment. Jungle Junior uses activity-based costing to determine the cost of the sales order processing and the customer return activity. The sales order processing activity has an activity rate of 20 per sales order, and the customer return activity has an activity rate of 100 per return. Jungle Junior sold 2,500 swing sets, which consisted of 750 orders and 80 returns. Determine (A) the total and (B) the per-unit sales order processing and customer return activity cost for swing sets.