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Category > Accounting Posted 22 Jul 2017 My Price 14.00

Carsten Wedding Fantasy Company

Carsten Wedding Fantasy Company makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity rates in its activity based costing system:

Activity Cost Pools

Activity Rate

Size-related

$0.75 per guest

Complexity-related

$34.41 per tier

Order-related

$84.03 per order

The measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake. The measure of complexity is the number of tiers in the cake. The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately.

Data concerning two recent orders appear below:

 

Ruise Wedding

Karmo Wedding

Number of reception guests

79

164

Number of tiers on the cake

2

4

Cost of purchased decorations for cake

$17.30

$56.86

Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Ruise wedding cake to just break even?

A) $229.40

B) $84.03

C) $277.57

D) $17.30

Answers

Maurice Tutor
(5)
Status NEW Posted 22 Jul 2017 10:07 AM My Price 14.00

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