Question
Activity-based costing. Carlton Fisher, the manager of Kingfish Charters, uses activity-based costing to compute the costs of his deep-sea fishing charters. Each chartered boat holds
Activity-based costing. Carlton Fisher, the manager of Kingfish Charters, uses activity-based costing to compute the costs of his deep-sea fishing charters. Each chartered boat holds six paying customers and a guide. The company offers two types of charters to corporations planning eventshalf-day trips for beginners and full-day trips for more seasoned fishermen. The breakdown of the costs is as follows: Activities (with cost drivers) Half-Day Charter Costs Full-Day Charter Costs Advertising $215 per event $216 per event Permits $34.25 per boat $50 per boat Equipment Use $20 per boat + $5 per person (including guides) $40 per boat + $8 per person (including guides) Insurance $75 per boat $127 per boat Paying Guides $300 per boat per guide $405 per boat per guide Food and drinks $40 per person (including guides) $60 per person (including guides) Required: a. Compute the cost of a corporate event requiring four boats for half-day charters for 28-persons (including four guides). b. Compute the cost of a corporate event requiring four boats for full-day charters for 28-persons (including four guides). c. Recommend a minimum price per customer to the manager if he wants to cover his costs.
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