Question

High Sky Inn is a bed and breakfast establishment in a converted 100-year-old mansion. The Inn's guests appreciate its gourmet breakfasts and individually decorated rooms. The Inn's overhead budget for the most recent month appears below:

Activity level 90 guests

Variable overhead costs:
Supplies $234
Laundry 315

Fixed overhead costs:
Utilities 220
Salaries and wages 4,290
Depreciation 2,680
Total overhead cost $7,739

The Inn's variable overhead costs are driven by the number of guests. What would be the total budgeted overhead cost for a month if the activity level is 99 guests?

a. $61,541.00
b. $7,793.90
c. $8,512.90
d. $7,739.00

Answer 1

Correct option is b. $7,793.90

Step-by-step explanation:

Calculation for What would be the total budgeted overhead cost for a month if the activity level is 99 guests

TOTAL BUDGETED OVERHEAD COST

Variable overhead costs:

Supplies $ 257.40

[ ($234 ÷ 90 guests)*99 guests].

Laundry $346.50

[($315 ÷ 90 guests)*99 guests]

Total variable overhead cost 603.90

($ 257.40+$346.50)

Fixed overhead costs:

Utilities 220.00

Salaries and wages 4,290.00

Depreciation 2,680.00

Total fixed overhead cost 7,190.00

(220.00+4,290.00+2,680.00)

Total budgeted overhead cost$7,793.90

($7,190.00+$603.90)

Therefore What would be the total budgeted overhead cost for a month if the activity level is 99 guests will be $7,793.90