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Chefs de Vitesse SA Chefs de Vitesse SA is a French company that provides passenger and crew meals to airlines operating out of the two
Chefs de Vitesse SA Chefs de Vitesse SA is a French company that provides passenger and crew meals to airlines operating out of the two international airports of Paris-Orly and Charles de Gualle (CDG). The operations at Orly and CDG are managed separately, and top management believes that greater sharing of information between the two operations should lead to improvements in operations. To better compare the two operations, an activity-based costing system has been designed with the active participation of the managers at both Orly and CDG. The activity-based costing system is based on the following activity cost pools and activity measures: Activity Cost Pools Activity Measure 1 Meal preparation Number of meals 2 Flight-related activities Number of flights 3 Customer service Number of customers 4 Other (costs of idle capacity and 5 organization-sustaining costs Not applicable 6 7 The operations at CDG airport serves 500,000 meals annually on 4,000 flights for 8 different -8 airlines. (Each airline is considered one customer.) The annual cost of running the CDG 19 airport operation, excluding only the costs of raw materials for meals, totals $2,650,000. 20 21 Activity Cost of the CDG Operation 22 Cooks and delivery personnel wages $1,800,000 23 Kitchen supplies 100,000 24 Chef salaries 200,000 25 Equipment depreciation 50,000 25 Administrative wages and salaries 180,000 Building Costs 320,000 28 Total Cost $2,650.000 29 30 To help determine the activity rates, employees were interviewed and asked how they 31 divided their time among the four major activities. The results of the interviews at CDG are 32 are displayed below: 33 34 Distribution of Resource Consumption 35 Across Activity Cost Pools 36 at the CDG Operation 37 Meal Flight Customer 28 Preparation Related Service Other Total 39 Cooks and delivery personnel wages 70% 25N ON SN 100% 40 Kitchen supplies 90X ON ON 10N 100N 41 Chef salaries 35% 15% 10N 100N 42 Equipment depreciation 70% ON 30 100N 43 Administrative wages and salaries ON 25% 45% 30% 1OON 44 Building Costs ON ON ON 100N 100% 45 46 Required: 47 Determine the cost to (1) prepare one meal, 12 deliver meals to one light, and (3) service one 48 customer, using the activity based costing approach 50 151 32 27 4ON ON
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