Ostler Hotel bases its budgets on guest-days. The hotel\'s static budget for Apr

Question

Ostler Hotel bases its budgets on guest-days. The hotel's static budget for April appears below:

The total overhead cost at an activity level of 9,700 guest-days per month should be:

Budgeted number of guest-days 8,700 Budgeted variable overhead costs: Supplies (@$7.00 per guest-day) $ 60,900 Laundry (@$3.80 per guest-day) 33,060 Total variable overhead cost 93,960 Budgeted fixed overhead costs: Wages and salaries 80,910 Occupancy costs 38,280 Total fixed overhead cost 119,190 Total overhead cost $ 213,150

Explanation / Answer

The total overhead cost at an activity level of 9,700 guest-days per month should be Budgeted number of guest-days 9700 Budgeted variable overhead costs: Supplies (@$7.00 per guest-day) $67,900 Laundry (@$3.80 per guest-day) $36,860 Total variable overhead cost (A) $104,760 Budgeted fixed overhead costs: Wages and salaries $80,910 Occupancy costs $38,280 Total fixed overhead cost (B) $119,190 Total overhead cost (A+B) $223,950

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