(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:

Transformational

Relating to or causing a significant change or shift in something, especially in a way that makes it better or more effective.

Transactional

An approach or interaction primarily focused on exchanges or transactions, often emphasizing efficiency and short-term gains.

Social Exchange Theory

A conceptual framework suggesting that social behavior is the result of an exchange process, aiming to maximize benefits and minimize costs in relationships.

LMX

Leader-Member Exchange, a theory emphasizing the dynamic relationships between leaders and their team members, focusing on how these relationships influence organizational outcomes.