Grodt Catering Uses Activity-Based Costing for Its Overhead Costs

question 121

Multiple Choice

Grodt 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 60 meals were served. The company catered the function for a fixed price of $19.00 per meal. The cost of the raw ingredients for the meals was $8.60 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 "red margin" in the report,rounded to the nearest whole dollar?

• A) ($165).
• B) ($115).
• C) ($15).
• D) $135.

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Definitions:

Taboo

A social or religious custom prohibiting or restricting a particular practice or forbidding association with a particular person, place, or thing.

Mainstream Culture

encompasses the prevailing beliefs, values, and practices shared by the majority in a society, influencing mass attitudes and behaviors.

Deviant

Deviant describes behaviors or actions that deviate from the societal norms or expectations, which can be either positive or negative in nature.

Culture Wars

The conflict between groups with different ideals, beliefs, or philosophies regarding cultural issues, reflecting deep divisions in society over values and norms.