Activity-Based Costing for a Service Business Sterling Hotel uses activity-based

Question

Activity-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 $8.10 per guest check-in, $23.00 per room cleaning, and $5.00 per served meal (not including food). Brian Washington visited the hotel for a 7-night stay. Washington had 8 meals in the hotel during her visit. Determine the total activity-based cost for Stone's visit during the month. Round your answer to the nearest cent. 232.1 X

Explanation / Answer

ABC Costing :-

Guest Check in

8.10

Room Cleaning (23 * 7)

161

Meals (8 * 5)

40

Total Cost

209.1

Single Plantwide Factory O/H Rate :-

O/H Rate per hour = $ 137600/4300 hrs = $ 32

Factory O/H allocated to sprockets = 1800 machine hrs * 32 = $ 57600

Guest Check in

8.10

Room Cleaning (23 * 7)

161

Meals (8 * 5)

40

Total Cost

209.1

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