Question

Activity-based costing for a service business

Draper Bank uses activity-based costing to determine the cost of servicing customers. There are three activity pools: teller transaction processing, check processing, and ATM transaction processing. The activity rates associated with each activity pool are $3.50 per teller transaction, $0.12 per canceled check, and $0.10 per ATM transaction. Corner Cleaners Inc. had 12 teller transactions, 100 canceled checks, and 20 ATM transactions during the month. Determine the total monthly activity-based cost for Corner Cleaners Inc. during the month.
Sterling Hotel uses activity-based costing to determine the cost of servicing customers. There are three activity pools: guest check-in, room cleaning, and meal service. The activity rates associated with each activity pool are $8.00 per guest check-in, $25.00 per room cleaning, and $4.00 per served meal (not including food). Ginny Campbell visited the hotel for a 3-night stay. Campbell had three meals in the hotel during her visit. Determine the total activity-based cost for Campbell’s visit.

Answer 1

a. $56

b. $95

Step-by-step explanation:

The computation is shown below:

a, The total monthly activity-based cost for Corner Cleaners Inc is

= $3.50 × 12 + $0.12 × 100 + $0.10 × 20

= $42 + $12 + $2

= $56

b the total activity-based cost for Campbell’s visit i

= $8 × 1 + $25 × 3 + $4 × $3

= $8 + $75 + $12

= $95

Hence, the same should be considered and relevant