Nissley Wedding Fantasy Corporation makes very elaborate wedding cakes to order.
ID: 2558331 • Letter: N
Question
Nissley Wedding Fantasy Corporation 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 Size-related Complexity-related Order-related Activity Rate ? 1.27 per guest $28.36 per tier $ 74.86 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: Tijerina Twersky Wedding Wedding 126 Number of reception guests Number of tiers on the cake Cost of purchased decorations for cake 51 $29.00 $54.78 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 Tijerina wedding cake to just break even?Explanation / Answer
Answer
Tijerina Wedding
Working
Cost
Size Related cost allocation
$1.27 per quest x 51 quests
64.77
Complexity Related cost allocated
$28.36 per tier x 3 tier
85.08
Cost of Purchased decorations
[given]
29
Oder Cost
74.86
Amount that the company can charge to be in Break Even
$253.71
Twersky Wedding
Working
Cost
Size Related cost allocation
$1.27 per quest x 126 quests
160.02
Complexity Related cost allocated
$28.36 per tier x 5 tier
141.8
Cost of Purchased decorations
[given]
54.78
Oder Cost
74.86
Amount that the company can charge to be in Break Even
$431.46
Tijerina Wedding
Working
Cost
Size Related cost allocation
$1.27 per quest x 51 quests
64.77
Complexity Related cost allocated
$28.36 per tier x 3 tier
85.08
Cost of Purchased decorations
[given]
29
Oder Cost
74.86
Amount that the company can charge to be in Break Even
$253.71
Twersky Wedding
Working
Cost
Size Related cost allocation
$1.27 per quest x 126 quests
160.02
Complexity Related cost allocated
$28.36 per tier x 5 tier
141.8
Cost of Purchased decorations
[given]
54.78
Oder Cost
74.86
Amount that the company can charge to be in Break Even
$431.46
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