Homework Answers
Solution 1:
| First stage allocation of cost to activity cost pools | |||||||||
| Particulars | Total Cost | Meal Preparation | Flight related | Customer Service | Others | ||||
| % | Amount | % | Amount | % | Amount | % | Amount | ||
| Cooks and delivery person wages | € 3,180,000.00 | 75% | € 2,385,000.00 | 20% | € 636,000.00 | 0% | € - | 5% | € 159,000.00 |
| Kitchen supplies | € 46,350.00 | 100% | € 46,350.00 | 0% | € - | 0% | € - | 0% | € - |
| Chef salaries | € 252,000.00 | 35% | € 88,200.00 | 20% | € 50,400.00 | 40% | € 100,800.00 | 5% | € 12,600.00 |
| Equipment depreciation | € 93,000.00 | 65% | € 60,450.00 | 0% | € - | 0% | € - | 35% | € 32,550.00 |
| Administrative wages and salaries | € 232,500.00 | 0% | € - | 25% | € 58,125.00 | 50% | € 116,250.00 | 25% | € 58,125.00 |
| Building costs | € 186,000.00 | 0% | € - | 0% | € - | 0% | € - | 100% | € 186,000.00 |
| Total | € 3,989,850.00 | € 2,580,000.00 | € 744,525.00 | € 217,050.00 | € 448,275.00 | ||||
Solution 2:
| Determination of activity rate for each activity | ||||
| Activity | Estimated Overhead Cost | Activity Base | Usage of Activity Base | Activity Rate |
| Meal Prepration | € 2,580,000.00 | Nos of meals | 1000000 | € 2.58 |
| Flight related | € 744,525.00 | Nos of flights | 5000 | € 148.91 |
| Customer service | € 217,050.00 | Nos of customers | 10 | € 21,705.00 |
| Others | € 448,275.00 | No allocation | ||
| Total | € 3,989,850.00 | |||
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crew meals to airlines operating out of two international airports
in Athens and Corfu. The operations at the two airports are managed
separately, and top management believes that there may be benefits
to greater sharing of information between the two operations.
To better compare the two operations, an ABC system has been
designed with the active participation of the managers at...
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Problem 7-22 Activity Rates and Activity-Based Management [LO2,
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Onassis Catering is a Greek company that provides passenger and
crew meals to airlines operating out of two international airports
in Athens and Corfu. The operations at the two airports are managed
separately, and top management believes that there may be benefits
to greater sharing of information between the two operations.
To better compare the two operations, an ABC system has been
designed with the active participation of the managers at...
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