Tutorial 9 E8.23 Activity-based costing: service firm Brian Jones, the manager of Walkabout Tours, uses activity-based costing to calculate the cost of the company's adventure walking trips. The company offers two basic trips: a two-day walk along the El Questro Gorge and a five-day trip to the Flinders Ranges. The activities and costs relevant to the walking trips are as follows: Activity Advertise Activity driver No. of trips Obtain National Park permit Destination Cost per unit of activity driver $75 per trip $ 150 per group permit issued Use equipment Insure participants Cook meals Guide walkers No. of person days $30 per person per day No. of people S7.SO per person No. of person- days $37.50 per person per day Distance walked $ 10.50 per kilometer The Ei Questro Gorge trip for 8 people, does not enter National Parks and covers a walking distance of SD kilometres. The Finders Ranges trip caters for IS people, is based in the Mt Remarble National Park, and covers 100 kilometres. Required: 1. Calculate the total cost of each trip, the cost per person for each trip, and the cost per day for each trip, using the activity-based costing system. 2. Before introducing activity-based costing, Brian had estimated the average cost of all trips at $97.50 per person per day. (This was based on the previous year's costs, adjusted for any expected changes.) Explain how the activity-based system results in more accurate service cost estimates.