Marchi Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion. The Inn’s guests appreciate its gourmet breakfasts and individually decorated rooms. The Inn’s overhead budget for the most recent month appears below:
Marchi Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion. The Inn’s guests appreciate its gourmet breakfasts and individually decorated rooms. The Inn’s overhead budget for the most recent month appears below: Picture The Inn’s variable overhead costs are driven by the number of guests. What would be the total budgeted overhead cost for a month if the activity level is 70 guests?
Answer :the total budgeted overhead cost for a month if the activity level is 70 guests = $ 6,620
Working notes for the above answer is as follow
we have been provided with 65guest details of variable cost and fixed cost
Now we will prepate it for 70 guest
| activity level: 65 guests | Total | Per guest |
| variable overhead costs | ||
| supplies | 156 | 2.4 |
| laundry | 364 | 5.6 |
| Toral Variable cost | 520 | 8 |
| fixed overhead costs | ||
| utilities | 250 | |
| salaries and wages | 4480 | |
| depreciation | 1330 | |
| Total Fixed Cost | 6060 | |
| Total Cost | 6580 |
Now we will calculate for 70 Guest
Fixed cost remain same with the change in Guest it will not change only variable cost will change .The calculation for 70 guest is as follow
| activity level: 65 guests | Total | Per guest |
| variable overhead costs | ||
| supplies (2.4*70) | 168 | 2.4 |
| laundry(5.6*70) | 392 | 5.6 |
| Toral Variable cost | 560 | 8 |
| fixed overhead costs | ||
| utilities | 250 | |
| salaries and wages | 4480 | |
| depreciation | 1330 | |
| Total Fixed Cost | 6060 | |
| Total Cost | 6620 |
