Nissley Wedding Fantasy Corporation makes very elaborate wedding cakes to order. The owner of the company has provided the following data concerning the activity ratesin its activity-based costing system:Activity Cost PoolsSize-relatedComplexity-relatedOrder-relatedActivity Rate$ 1.19 per guest$ 28.28 per tier$74.78 per orderThe measure of activity for the size-related activity cost pool is the number of planned guests at the wedding reception. The greater the number of guests, the larger the cake.The measure of complexity is the number of tiers in the cake. The activity measure for the order-related cost pool is the number of orders. (Each wedding involves one order.)The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such asminiature statues and wedding bells, which are accounted for separately.Data concerning two recent orders appear below:Number of reception guestsNumber of tiers on the cakeTijerinaWeddingTwerskyWedding4712235$ 54.70Cost of purchased decorations for cake$ 28.60Assuming 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 Tijerinawedding cake to just break even?

Activity Based Costing(ABC) :-Activity-Based Costing (ABC) serves as a potent tool for performance…

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?

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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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
$ 1.19 per guest
$ 28.28 per tier
$74.78 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:
Number of reception guests
Number of tiers on the cake
Tijerina
Wedding
Twersky
Wedding
47
122
3
5
$ 54.70
Cost of purchased decorations for cake
$ 28.60
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?

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