Question

Papenfuss Family 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 80 guests Variable overhead costs: Supplies $ 144.00 Laundry 600.00 Fixed overhead costs: Utilities 444.00 Salaries and wages 5,120.00 Depreciation 2,900.00 Total overhead cost $ 9,208.00 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 70 guests

Answer 1

Answer: $9,115‬

Step-by-step explanation:

Total budgeted overhead cost =Variable Costs + Overhead costs

The variable costs listed are for an activity level of 80 guests but 70 guests will be coming.

The variable costs will be;

Supplies

= (144 / 80) * 70

= $126

Laundry

= ( 600/80 ) * 70

= $525

The rest are fixed costs so will stay the same regardless of activity level.

Total budgeted overhead cost = 126 + 525 + 444 + 5,120 + 2,900

= $9,115‬