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: 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?

Question

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:  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?

Quizplus · Accepted Answer

First, we need to determine the variable overhead cost per guest:
Variable overhead cost per guest = (Budgeted variable overhead cost – Budgeted fixed overhead cost) / Budgeted number of guests
Variable overhead cost per guest = ($8,278 – $2,300) / 152 = $34.50

Next, we can use the formula for total overhead cost:
Total overhead cost = Fixed overhead cost + (Variable overhead cost per guest × Number of guests)
Total overhead cost = $2,300 + ($34.50 × 76) = $8,274.

Therefore, the total budgeted overhead cost for a month with 76 guests is $8,274.40.

Papenfuss Family Inn Is a Bed and Breakfast Establishment in a Converted