Papenfuss Family Inn is a bed and breakfast establishment in a converted 100-yea

Question

Papenfuss Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion. The Inn's guests appreciate its gourmet breakfasts and individually decorated rooms. The Inn's overhead budget for the most recent month appears below:

The Inn's variable overhead costs are driven by the number of guests.
What would be the total budgeted overhead cost for a month if the activity level is 68guests?

Activity level 78 guests Variable overhead costs: Supplies $ 136.50 Laundry 577.20 Fixed overhead costs: Utilities 381.00 Salaries and wages 5,430.00 Depreciation 3,580.00 Total overhead cost $ 10,104.70

Explanation / Answer

Note : Fixed overhead costs remains same irresepective of Activity level ie fixed cost as per budget remains unchanged in comuting the total cost in different level of activities.

Computation of total budgeted overhead cost (activity level is 68 guests)

Details Working Amount ($) Variable overhead costs: Supplies = ($136.50 / 78 guests)*68 guests 119 Laundry = ($577.20 / 78 guests)*68 guests 503.20 Fixed overhead costs: Utilities 381 Salaries and wages 5,430 Depreciation 3,580 Required Total overhead cost $10,013.20

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