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24 October, 18:16

Activity-Based Costing for a Service Business 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 $8.60 per guest check-in, $24.00 per room cleaning, and $3.00 per served meal (not including food). Janelle Washington visited the hotel for a 4-night stay. Janelle had 7 meals in the hotel during the visit. Determine the total activity-based cost for Washington's visit during the month. Round your answer to the nearest cent.

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  1. 24 October, 18:25
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    Total cost = $126

    Explanation:

    Giving the following information:

    There are three activity pools:

    $8.60 per guest check-in

    $24.00 per room cleaning

    $3.00 per served meal.

    Janelle Washington visited the hotel for a 4-night stay. Janelle had 7 meals in the hotel during the visit.

    We will assume that the room gets clean every day:

    Total cost = Estimated activity-based cost * Actual amount of allocation base

    Total cost = 8.60*1 + 24*4 days + 3*7 meals = $125.6
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