The Concrete Rose has been a staple of their community for several decades. As the owner retires and promotes his daughter Moira to CEO of this successful music venue, the management staff has prepared suggestions for improvements. At the top of their list is the implementation of Time-Driven Activity-Based Costing (TDABC) over their current traditional costing methods. With this new change, the management team believes they can optimize their earnings. They compiled the following data about their identified key activities:
The Concrete Rose spent $389,500 to operate the ticketing department, and these resources created a capacity of 495,000 minutes. How much total cost would be allocated to the key activities? (If required, round calculations to two decimal places.)
A) $326,428.00
B) $389,500.00
C) $389,547.96
D) $391,050.00

Question

The Concrete Rose has been a staple of their community for several decades. As the owner retires and promotes his daughter Moira to CEO of this successful music venue, the management staff has prepared suggestions for improvements. At the top of their list is the implementation of Time-Driven Activity-Based Costing (TDABC) over their current traditional costing methods. With this new change, the management team believes they can optimize their earnings. They compiled the following data about their identified key activities:
 The Concrete Rose spent $389,500 to operate the ticketing department, and these resources created a capacity of 495,000 minutes. How much total cost would be allocated to the key activities? (If required, round calculations to two decimal places.)
A) $326,428.00 
B) $389,500.00 
C) $389,547.96 
D) $391,050.00

Quizplus · Accepted Answer

This question requires the calculation of the rate for supplying an activity by taking the total cost of the activity and dividing it by the practical capacity available expressed in time: $389,500/495,000 minutes = $0.79 per minute. Next, multiply the per-minute rate by the time to complete each activity: $0.79 × 4 minutes per ticket sale = $3.16 per ticket sale; $0.79 × 1.5 minutes per ticket admittance = $1.19 per ticket admittance; and $0.79 × 8 minutes per ticket refund = $6.32 per ticket refund. Next, multiply each activity rate by the number of tickets handled per year, and then sum their totals: ($3.16 × 84,620) + ($1.19 × 77,844) + ($6.32 × 4,670) = $267,399.20 + $92,634.36 + $29,514.40 = $389,547.96 (Choice C).

The Concrete Rose Has Been a Staple of Their Community