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

question 2

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 "red margin" in the action analysis report? (Round to the nearest whole dollar. )

• A)$690
• B)$440
• C)$390
• D)$540

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Definitions:

Token Economy

A behavior modification system that uses tokens as reinforcement for desired behaviors, which can be exchanged for desired rewards.

Behavioral Activation System

A neurological system involved in regulating approach behavior in response to rewards.

Conditioned Stimulus

In classical conditioning, a previously neutral stimulus that, after becoming associated with the unconditioned stimulus, eventually comes to trigger a conditioned response.

Reciprocal Determinism

A concept in psychology that suggests individual behavior and the social environment influence each other.