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

question 13

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.
Suppose an action analysis report is prepared for the function mentioned above.What would be the "yellow margin" in the action analysis report? (Round to the nearest whole dollar. )

• A)$635
• B)$815
• C)$710
• D)$760

Understand methods to measure and report asset efficiency and performance.

Understand how to calculate total asset turnover including its significance.

Recognize the various methods and rationales for depreciation, amortization, and depletion.

Identify the components and costs included in acquiring assets.

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Definitions:

Locked Warehouse

A secured storage facility used to hold goods or collateral, often for financial arrangements or until customs duties are settled.

Cost of Goods Available for Sale

The total cost incurred for the merchandise sold by a company during a specific period, including the cost of inventory at the beginning of the period and purchases made during the period.

Inventory at Year-End

The valuation of unsold goods and materials on hand at the close of a fiscal year, recorded as a current asset on the balance sheet.

Purchase of Inventory

The acquisition of goods and materials a company intends to sell in the normal course of business.