Multiple ChoiceOOO$15.65$522.50$72.96$470.91 Bevard Nuptial Bakery makes very elaborate wedding cakes to order. The company hasan activity-based costing system with three activity cost pools. The activity rate for theSize-Related activity cost pool is $1.05 per guest. (The greater the number of guests, thelarger the cake.) The activity rate for the Complexity-Related cost pool is $37.55per tier.(Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Relatedactivity cost pool is $72.96 per order. (Each wedding involves one order for a cake.) Theactivity rates include the costs of raw ingredients such as flour, sugar, eggs, andshortening. 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 cakeCost of purchased decorationsfor cakeEuertzWedding788$15.65SparacioWedding21410$78.12Assuming that all of the costs listed above are avoidable costs in the event that an orderis turned down, what amount would the company have to charge for the Euertz weddingcake to just break even?

Avoidable Cost -A cost that can be avoided by abstaining from or ceasing to conduct an activity is…

Answered: O O O $15.65 $522.50 $72.96 O $470.91

Business

Accounting

O O O $15.65 $522.50 $72.96 O $470.91

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

Multiple Choice
O
O
O
$15.65
$522.50
$72.96
$470.91

Bevard Nuptial Bakery makes very elaborate wedding cakes to order. The company has
an activity-based costing system with three activity cost pools. The activity rate for the
Size-Related activity cost pool is $1.05 per guest. (The greater the number of guests, the
larger the cake.) The activity rate for the Complexity-Related cost pool is $37.55
per tier.
(Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Related
activity cost pool is $72.96 per order. (Each wedding involves one order for a cake.) 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
Cost of purchased decorations
for cake
Euertz
Wedding
78
8
$15.65
Sparacio
Wedding
214
10
$78.12
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 Euertz wedding
cake to just break even?

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