Papenfuss 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:
| Activity level | 86 | guests |
| Variable overhead costs: | ||
| Supplies | $86.00 | |
| Laundry | 507.40 | |
| Fixed overhead costs: | ||
| Utilities | 340.00 | |
| Salaries and wages | 4,790.00 | |
| Depreciation | 2,620.00 | |
| Total overhead cost | $8,343.40 |
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 76 guests?
$52,848.40
$8,343.40
$8,274.40
$7,373.24
Answer : $ 8274.40
Working Notes
Variable overhead costs
Supplies 86
Laundry 507.40
we must take the average of supplies and laundry per person
86/86 =1
50.40/86 =5.9
Now we calculatetotal budgeted overhead cost for a month if the activity level is 76 guests
Variable overhead costs
Supplies 76*1 = 76
Laundry 76*5.9 = 448.4
Total Variable o.h = 524.4
Fixed Cost
Utilities =340
Salary And O.H. =4790
Depriciation =2620
Total Fixed cost 7750
Total Cost = 524.4+7750 (Variable+Fixed)
= $ 8274.40
