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Groce Catering Uses Activity-Based Costing for Its Overhead Costs

question 113

Multiple Choice

Groce Catering uses activity-based costing for its overhead costs. The company has provided the following data concerning the activity rates in its activity-based costing system:

The number of meals served is the measure of activity for the Preparing Meals activity cost pool. The number of functions catered is used as the activity measure for the Arranging Functions activity cost pool.

Management would like to know whether the company made any money on a recent function at which 150 meals were served. The company catered the function for a fixed price of $14.00 per meal. The cost of the raw ingredients for the meals was $8.75 per meal. This cost is in addition to the costs of wages, supplies, and other expenses detailed above.

For the purposes of preparing action analyses, management has assigned ease of adjustment codes to the costs as follows: wages are classified as a Yellow cost, supplies and raw ingredients as a Green cost, and other expenses as a Red cost.

-(Appendix 5A) In an action analysis report prepared for the function mentioned above,what would be the "yellow margin" in the report,rounded to the nearest whole dollar?

Definitions:

Military Buildup

The process of expanding and strengthening a country's armed forces through increased spending, recruitment, and development of weapons and technology.

Arms Talks

Negotiations between nations aimed at mutual reduction or control of military weapons and equipment.

Jay Treaty

The Jay Treaty was an agreement made in 1794 between the United States and Great Britain, aimed at settling outstanding issues since the Treaty of Paris in 1783, which had ended the American Revolutionary War, and facilitating ten years of peaceful trade.

Great Lakes

A group of five large, interconnected freshwater lakes located in North America on the Canada–United States border, constituting the largest group of freshwater lakes in the world by total area.