Groce Catering Uses Activity-Based Costing for Its Overhead Costs $\quad$

question 35

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:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Activity Cost Pools }$
$\begin{array} { | l | r | r | } \hline & \text { Preparing Meals } & \text { Arranging Functions } \\\hline \text { Wages } & \$ 0.70 & \$ 145.00 \\\hline \text { Supplies } & \$ 0.45 & \$ 230.00 \\\hline \text { Other expenses } & \$ 0.40 & \$ 100.00 \\\hline\end{array}$
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.


-According to the activity-based costing system,what was the total cost (including the costs of raw ingredients) of the function mentioned above,rounded to the nearest whole dollar?

• A) $1,370.
• B) $1,520.
• C) $2,020.
• D) $2,220.

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Definitions:

Indirect Method

An approach used in cash flow statements where net income is adjusted for non-cash transactions, deferred revenues, and expenses to calculate cash flow from operating activities.

Indirect Approach

A method used in cash flow statements where net income is adjusted for non-cash transactions and changes in working capital to calculate cash flow from operating activities.

Noncash Charges

Expenses reported on an income statement that do not involve actual cash flow, such as depreciation, amortization, and stock-based compensation.

Noncash Credits

Transactions that increase a company's assets or decrease liabilities without the direct movement of cash.