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Job costing; department overhead cost allocation: tour operator Asian Adventure Holidays offers a series of holiday packages aimed at families, seniors and corporate groups.

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Job costing; department overhead cost allocation: tour operator Asian Adventure Holidays offers a series of holiday packages aimed at families, seniors and corporate groups. The financial controller, Jack Tallis, is preparing for the annual board meeting and is concerned about the loss that the business sustained in the past year. He has examined the profits for each of the three departments of the businessfamily, seniors and corporateand it seems that the corporate department is the source of the problem. Jack has asked you to assist him to look more closely at the three packages offered by the corporate department to see which holiday packages are yielding profits and which are not. The three packages are to Thailand, Malaysia and Indonesia. The sales and direct costs of each corporate packages for last year are as follows: Bali Adventure Thailand Discovery Malaysian Orienteering Number of packages sold Number of people per package Revenue per person Direct cost per package: Tour leader Tour assistant Air travel Accommodation Equipment hire Meals 10 5 $18 ooo $5 ooo 2 ooo 28 ooo 15 ooo 4 000 18 ooo 20 6 $12 ooo $12 ooo 3 ooo 30 ooo 26 ooo 15 ooo 10 8 $14 ooo $9 ooo 6 ooo 32 ooo 24 ooo 9 ooo 8 ooo To calculate the profitability of each package, a proportion of the overhead costs of running the corporate department needs to be allocated to the three packages. Jack has suggested that these costs could be allocated to each package in proportion to actual sales revenue. For last year these overhead costs were as follows: Salaries Phone Depreciation on equipment Utilities Rent and taxes Other department costs Total Required: $200 ooo 2 ooo 5 ooo 2 ooo g OOO 12 ooo $230 ooo 1 Calculate the profit per package and the total profitability of each of the three corporate

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