The operations vice president of Jessminder Hotels has been interested in investigating the efficiency of the hotel's operations. She has been particularly concerned about the costs of handling routine check ins and would like to compare these costs at the hotel's various locations. If the locations with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the hotel maintains good records of wages and othe costs, there has been no attempt to show how those costs are related to the various services. The operations VP has asked for an activity-based costing study of hotel operations. In particular, she would like to know the cost of check in, check out, and the cost of other customer interactions. The San Francisco Hotel has submitted the following cost data for last year: Totals Front desk wages 200000 Assistant manager salary 105000 General manager salary 150000 Total cost 445000 In addition to the cost data above, the employees of the San Francisco property have been interviewed concerning how their time was distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below: Check in Check out Other Total Front desk wages 50% 40% 10% 100% Assistant manager salary 20% 5% 75% 100% General manager salary 10% 5% 85% 100% Virtually all other costs of the locations - rent, depreciation, utilities, and so on - are organization-sustaining costs that cannot be meaningfully assigned to individual customer interactions. Required: Prepare the first-stage allocations of costs to activity cost pools. The manager of the San Francisco branch of the Jessminder Hotel has provided the following data concerning the transactions of the property during the past year: Activity Total cost Total Activity at San Franc. Prop. Check in 136000 85000 check ins Check out 92750 61020 check outs Other 226250 9050 other customer transactions The lowest costs reported by other properties for these activities are displayed below: Activity Lowest among al J.H. properties Check in 1.60 per check in Check out 1.24 per check out Other 21.00 per othe customer transaction On the basis of data listed: Compute the activity rates for the activity-based costing system. Round all computations to the nearest whole cent. What do these results suggest to you concerning operations at the San Francisco property?

The operations vice president of Jessminder Hotels has been interested in investigating the efficiency of the hotel's operations. She has been particularly concerned about the costs of handling routine check ins and would like to compare these costs at the hotel's various locations. If the locations with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the hotel maintains good records of wages and othe costs, there has been no attempt to show how those costs are related to the various services. The operations VP has asked for an activity-based costing study of hotel operations. In particular, she would like to know the cost of check in, check out, and the cost of other customer interactions. The San Francisco Hotel has submitted the following cost data for last year: Totals Front desk wages 200000 Assistant manager salary 105000 General manager salary 150000 Total cost 445000 In addition to the cost data above, the employees of the San Francisco property have been interviewed concerning how their time was distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below: Check in Check out Other Total Front desk wages 50% 40% 10% 100% Assistant manager salary 20% 5% 75% 100% General manager salary 10% 5% 85% 100% Virtually all other costs of the locations - rent, depreciation, utilities, and so on - are organization-sustaining costs that cannot be meaningfully assigned to individual customer interactions. Required: Prepare the first-stage allocations of costs to activity cost pools. The manager of the San Francisco branch of the Jessminder Hotel has provided the following data concerning the transactions of the property during the past year: Activity Total cost Total Activity at San Franc. Prop. Check in 136000 85000 check ins Check out 92750 61020 check outs Other 226250 9050 other customer transactions The lowest costs reported by other properties for these activities are displayed below: Activity Lowest among al J.H. properties Check in 1.60 per check in Check out 1.24 per check out Other 21.00 per othe customer transaction On the basis of data listed: Compute the activity rates for the activity-based costing system. Round all computations to the nearest whole cent. What do these results suggest to you concerning operations at the San Francisco property?

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

The San Francisco Hotel has submitted the following cost data for last year:

	Totals
Front desk wages	200000
Assistant manager salary	105000
General manager salary	150000
Total cost	445000

In addition to the cost data above, the employees of the San Francisco property have been interviewed concerning how their time was distributed last year across the activities included in the activity-based costing study. The results of those interviews appear below:

	Check in	Check out	Other	Total
Front desk wages	50%	40%	10%	100%
Assistant manager salary	20%	5%	75%	100%
General manager salary	10%	5%	85%	100%

Virtually all other costs of the locations - rent, depreciation, utilities, and so on - are organization-sustaining costs that cannot be meaningfully assigned to individual customer interactions.

Required:

Prepare the first-stage allocations of costs to activity cost pools.
The manager of the San Francisco branch of the Jessminder Hotel has provided the following data concerning the transactions of the property during the past year:

Activity	Total cost	Total Activity at San Franc. Prop.
Check in	136000	85000 check ins
Check out	92750	61020 check outs
Other	226250	9050 other customer transactions

The lowest costs reported by other properties for these activities are displayed below:

Activity	Lowest among al J.H. properties
Check in	1.60 per check in
Check out	1.24 per check out
Other	21.00 per othe customer transaction

On the basis of data listed:

Compute the activity rates for the activity-based costing system. Round all computations to the nearest whole cent.
What do these results suggest to you concerning operations at the San Francisco property?

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