Question

Merge & Center - S - % ) 38- Insert Delete com Conditional Formatas Cell Formatting Table - Styles Styles Alignment Number Clipboard 166 Font x ve Supervision $1,700,000 1,000 850 3,500 HT 5350 S 317.76 $ 317,757.01 225 666.67 $ 100,000.00 SOS770 $ 14.11 $3,314,030.08S Supplies Units manufacture 150 110 $190,000 $8,550,000 25 Total 234,300 175,420 191.550 Questions: 3. Use activity based costing to allocate the costs of overhead per unit and in total to each guest room type. Show all supporting calculations in the space provided to the right 4. Calculate the cost of one Presidential Suite using activity based costing 5. At the current selling price, is the company covering its true cost of production of the Presidential Sutte? Briefly discuss 59 6. What should price should choice Hotels charges for the Presidential Suite? 61 7. Assume that the Presidential Suite has the same profit margin as the standard guest room. What should its selling price be? Show all calculations 63 8. What should Choice Hotels do if the quantity of the Presidential Suite Guest Rooms sold at the new price fails to 10 per year? 3. What should Choice Hotels of the price of the Presidential Suite cannot exceed 51,050,000? 10. At a selling price of $1,050,000 each, what is the breakeven unit vokime for the Presidential Suite?

can you help me with the answers to questions 3-10?

Answer 1

3.

Manufacturing Overhead	Amount	Cost Driver	Standard Guest Room	Junior Suite	Presidential Suite	Sum Total of Cost Drivers	Cost per Cost Driver	Total Overhead Allocated for Standard Guest Room	Total Overhead Allocated for Junior Suite	Total Overhead Allocated for Presidential Suite	Check
Depreciation	$3,200,000	Square Feet	50000	30000	30000	110000	29.09	$1,454,545	$872,727	$872,727
Maintenance	$1,800,000	Direct Labour Hours	180000	143000	148500	471500	3.82	$687,169	$545,917	$566,914
Purchasing	$320,000	# of Purchase Orders	2500	1500	9000	13000	24.62	$61,538	$36,923	$221,538
Inspection	$850,000	# of Inspection	1000	850	3500	5350	158.88	$158,879	$135,047	$556,075
Materials	$490,000	Units Manufactured	150	110	25	285	1719.30	$257,895	$189,123	$42,982
Supervision	$1,700,000	# of Inspection	1000	850	3500	5350	317.76	$317,757	$270,093	$1,112,150
Supplies	$190,000	Units Manufactured	150	110	25	285	666.67	$100,000	$73,333	$16,667
Total	$8,550,000		234800	176420	194550	605770		$3,037,783	$2,123,164	$3,389,053	$8,550,000
Volume (A)								150	110	25
Overhead Cost per unit of Each Guest Room Type (Total/A)								$20,251.89	$19,301.49	$135,562.13
4	Calculation of Cost for One Presidential Suite using Activity Based Costing.
	Particulars	Amount ($)
	Direct Material	$310,000.00
	Direct Labour	$640,000.00
	Manufacturing Overhead	$135,562.13
	Total Unit Cost	$1,085,562.13
5	The Current Selling Price for a Presidential Suite is $ 1,050,000, while the cost as per Activity Based Costing is $ 1,085,562.13, definitely, the current selling price which is $35,562.13 lower isn't covering the cost of production of the presidential suite.
6	The Hotel should sell at $ 1,163,102
	Current Profit Margin
	Selling Price (A)	$1,050,000.00
	Gross Profit (B)	$70,000.00
	Profit Margin% (C=B/A)	6.67
	Cost% (100-C)	93.33
	Selling Price for Presidential Suite (using the Margin of Stand Room) ($ 1,085,562.13/93.33%)	$1,163,102
7	The New Selling Price should be $ 1,203,509
	Calculation of Profit Margin for Standard Guest Room
	Selling Price (A)	$140,000
	Gross Profit (B)	$26,000
	Profit Margin% (C=B/A)	18.57
	Cost% (100-C)	81.43
	Selling Price for Presidential Suite (using the Margin of Stand Room) ($ 980,000/81.43%)	$1,203,509
8	If the units sold reduced to 10 per year, the company continues to make a profit and therefore continue production
9	If prices cannot exceed the $ 1,050,000 prices, the company should stop producing these units since it will be a loss
10	Break-Even Units is 10.856 Units
	Break Even Unit = Fixed Cost / Unit Contribution*
	= $ 1,085,562.13/ 100,000
	= 10.856 Units
	*Fixed Cost as calculated in Point #4
	*Unit Contribution as calculated in Point #6