(Appendix 6A)Grogam Catering Uses Activity-Based Costing for Its Overhead Costs

question 5

Multiple Choice

(Appendix 6A) Grogam 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 100 meals were served.The company catered the function for a fixed price of $21 per meal.The cost of the raw ingredients for the meals was $8.25 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.
According to the activity-based costing system, what was the total cost (including the costs of raw ingredients) of the function mentioned above? (Round to the nearest whole dollar. )

• A)$1, 560
• B)$1, 760
• C)$1, 060
• D)$910

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Definitions:

Cost Data

Information regarding the expenses incurred in the production or delivery of goods and services, used for pricing, budgeting, and financial analysis.

Fixed Costs

Expenses that do not change with the level of production or sales in the short term, such as rent, salaries, or insurance premiums.

Unitised

Refers to the conversion of a product or service into quantifiable units, typically for ease of calculation, tracking, or comparison.

Special Decisions

Decisions made in unique or non-recurring situations requiring specific analysis or responses.