Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The

Question

Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system:



The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake. The measure of complexity is the number of tiers in the cake. The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately.
Data concerning two recent orders appear below:



Assuming that the company charges $556.96 for the Smith wedding cake, what would be the overall margin on the order?



a. $152.45

b. $96.66

c. $460.30

d. $165.41

Lifsey Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity-based costing system:



The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake. The measure of complexity is the number of tiers in the cake. The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately.
Data concerning two recent orders appear below:



Assuming that the company charges $556.96 for the Smith wedding cake, what would be the overall margin on the order?



a. $152.45

b. $96.66

c. $460.30

d. $165.41

Explanation / Answer

b. $96.66 margin on the order = 556.96 - cost cost = 177.66 + 158.1 + 55.78 +68.76 = 460.3 margin on the order = 96.66

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