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 $8.30 per guest check-in, $20.00 per room cleaning, and $3.00 per served meal (not including food). Brian Campbell visited the hotel for a 5-night stay. Campbell had 7 meals in the hotel during her visit.

Determine the total activity-based cost for Stone’s visit during the month. Round your answer to the nearest cent.
$

Answer 1

Activity Pool	Activity Rate $		Activity Usage	Activity-Based Cost $
Guest check-in	8.30	per guest check-in	1	8.30
Room cleaning	20.00	per room cleaning	5	100.00
Meal service	3.00	per served meal	7	21.00
Total $				129.30

The total activity-based cost for Campbell's visit: $129.30