Question

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 per guest check-in, $25 per room cleaning, and $4 per served meal (not including food). Ginny Campbell visited the hotel for a three-night stay. Campbell had three meals in the hotel during her visit. Determine the total activity-based cost for Campbell's visit. $

Answer 1

Answer:

Total allocated costs= $95

Explanation:

To allocate costs to the Campbell visit, we need to use the following formula:

Allocated costs= Estimated activity rate * Actual amount of allocation base

guest check-in= 8

room cleaning= 25*3= 75

served meal= 4*3= 12

Total allocated costs= $95