For many years the Honey Lake Summer Camp had used the number of campers per wee
ID: 2435817 • Letter: F
Question
For many years the Honey Lake Summer Camp had used the number of campers per week to estimate weekly costs. The summer camp is open for ten weeks during the summer with a different number of campers each week. July is busiest with June and the end of August least busy. Costs from the last week of summer camp in 1998 are used to estimate costs for 1999 for pricing purposes. The following costs occurred during the last week of 1998 and the costs of each cost category are expected to be the same for 1999:Weekly Cost
Supervisor's salary $ 400
Cook's salary 300
Camp counselor salaries (1 for each occupied cabin, each which hold 10 campers) (5 counselors × $200/counselor) 1,000
Food (50 campers × $100/camper) 5,000
Supplies (50 campers × $20/camper) 1,000
Utilities (50 campers × $10/camper) 500
Insurance (50 campers × $20/camper) 1,000
Property tax ($10,000/10 weeks) 1,000
Weekly total $12,200
Cost per camper: $12,200/50 campers = $244/camper
The Honey Lake Summer Camp expects 75 campers during the second week of July.
a. What is the expected cost of that week using the average cost?
b. What is the expected cost of that week using Activity Based Costing?
Explanation / Answer
a. What is the expected cost of that week using the average cost?
you have mistake in question ....... the total comes to $10,200 and not $12,200
Average cost per camper = $10,200/50 campers = $204/camper
Weekly cost for 2nd week of July = $204 X 75 = $15,300
b. What is the expected cost of that week using Activity Based Costing?
Predetermined Overhead Rate under Activity Based Costing
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Activity Base Total Cost Rate
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Supervisor' salary Direct $400
Cook salary Direct $300
Counsellor's salary no. of cabins
5 $1,000 $1,000/5 = $200/cabin
no. of weeks
Property tax 10 $10,000 $10,000/10 = $1000/week
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Expected cost of the week usig ABC
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Variable Costs
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Food 75 x $100 $7,500
Supplies 75 x $20 $1,500
Utilities 75 x $10 $750
Insurance 75 x $20 $1,500 $11,250
Overhead Costs
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Supervisor's salary $400
Cook salary $300
Counsellor's salary 8 x $200 $1,600
Property tax 1 x $1000 $1,000
Total weekly cost $14,550
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