For many years the Honey Lake Summer Camp had used the number of campers per wee
ID: 2346472 • Letter: F
Question
For many years the Honey Lake Summer Camp had used the number of campers per week to estimate weekly costs. The summer camp is open for ten weeks during the summer with a different number of campers each week. July is busiest with June and the end of August least busy. Costs from the last week of summer camp in 1998 are used to estimate costs for 1999 for pricing purposes. The following costs occurred during the last week of 1998 and the costs of each cost category are expected to be the same for 1999:Weekly Cost
Supervisor's salary $ 400
Cook's salary 300
Camp counselor salaries (1 for each occupied cabin, each which hold 10 campers) (5 counselors × $200/counselor) 1,000
Food (50 campers × $100/camper) 5,000
Supplies (50 campers × $20/camper) 1,000
Utilities (50 campers × $10/camper) 500
Insurance (50 campers × $20/camper) 1,000
Property tax ($10,000/10 weeks) 1,000
Weekly total $10,200
Cost per camper: $10,200/50 campers = $204/camper
The Honey Lake Summer Camp expects 75 campers during the second week of July.
a. What is the expected cost of that week using the average cost?
b. What is the expected cost of that week using ABC?
Explanation / Answer
A. Expected cost using using Average cost system: Average cost per camper = $204 Expected campers in the week = 75 Expected average cost of the week = 75 x $204 So total expected cost of the week = $15,300 Average cost per camper = $204 Expected campers in the week = 75 Expected average cost of the week = 75 x $204 So total expected cost of the week = $15,300 B. Expected cost using ABC: Activity cost pools Expected use of cost Activity based Cost assigned drivers per product overhead rates in the week Supervisors salary 1 $400 $400 Cook's salary 1 300 300 Camp counselor salary 7.5 200 1500 Food 75 100 7,500 Supplies 75 20 1500 Utilities 75 10 750 Insurance 75 20 1500 Property tax 1 1000 1000 Total assigned cost $14,450 Activity cost pools Expected use of cost Activity based Cost assigned drivers per product overhead rates in the week Supervisors salary 1 $400 $400 Cook's salary 1 300 300 Camp counselor salary 7.5 200 1500 Food 75 100 7,500 Supplies 75 20 1500 Utilities 75 10 750 Insurance 75 20 1500 Property tax 1 1000 1000 Total assigned cost $14,450 Activity cost pools Expected use of cost Activity based Cost assigned drivers per product overhead rates in the week Supervisors salary 1 $400 $400 Cook's salary 1 300 300 Camp counselor salary 7.5 200 1500 Food 75 100 7,500 Supplies 75 20 1500 Utilities 75 10 750 Insurance 75 20 1500 Property tax 1 1000 1000 Total assigned cost $14,450Related Questions
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