Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 1 Each barbecue is sold for $5.00, and each balloon is sold for $2.00. Throughout the two weekend days, the four friends were able

Question 1

Each barbecue is sold for $5.00, and each balloon is sold for $2.00. Throughout the two weekend days, the four friends were able to sell 300 barbecues and 170 balloons. The four friends did not have to bother about the stock of sausage and bread or balloons; they arranged with a supplier and had to pay only $0.25 per barbecue served (a slice of bread and a sausage) and $0.07 for each balloon. For the sake of remuneration, the friends have agreed that each one would receive $200 for the two days of hard work as labour cost. Besides the costs of labour and material, the four friends had other costsfor the two days. For the sake of simplicity, two costs were related to the production process, which were leasing a BBQ ($400) and a balloon pump ($50) during the weekend. The other two costs were related to sales and administrative tasks, which were leasing a gazebo ($100) and getting a permit for having the stand outside the shopping centre ($250) during the weekend.

a) Based only on the information provided above, prepare a contribution format income statement for BBQ & Balloons.

Agnetha and Bjrn spent most of their time preparing the barbecues or inflating balloons, whereas Benny and Anni-Frid were busy with sales and administrative tasks. The table below has information regarding the four friends' activities over the weekend concerning labour.

image text in transcribed

Agnetha spent most of this time during the two days operating the BBQ, Bjrn was mostly busy inflating balloons, Benny was responsible for the cashier, and Anni-Frid spent most of his time greeting and liaising with customers. For calculating an activity rate, the friends have decided to use the following cost drivers; for operating the BBQ the number of barbecues sold, for inflating balloons the number of balloons sold, and for cashier and greeting customers the grand total units of barbecues and balloons sold (total number of transactions).

Required

b) Considering the four cost pool activities (operating the BBQ, inflating balloons, cashier, and greeting customers) prepare a table with the labour cost per activity.

image text in transcribed

c) Calculate the activity rate for each of the labour cost pool activities and identify which of the four cost pool activities is most expensive and why?

image text in transcribed

Table 1 - Labour Activity \begin{tabular}{|lcccc|} \hline Activity Cost Pool & Total Cost & Total Activity & Activity Rate & Activity \\ BBQ & ? & ? & ? & Per barbecue sold \\ Balloons & ? & ? & ? & Per balloon sold \\ Cash transactions & ? & ? & ? & Per transaction \\ Customers greeted & ? & ? & ? & Per transaction \\ \hline \end{tabular} \begin{tabular}{|lccccc|} \hline Person & Operating the BBQ & Inflating balloons & Cashier & Greeting customers & Total \\ Agnetha & ? & ? & ? & ? & $200 \\ Bjrn & ? & ? & ? & ? & $200 \\ Benny & ? & ? & ? & ? & $200 \\ Anni-Frid & ? & ? & ? & ? & $200 \end{tabular} Total ? ? ? ? $800 \begin{tabular}{|lccccc|} \hline Person & Operating the BBQ & Inflating balloons & Cashier & Greeting customers & Total \\ Agnetha & ? & ? & ? & ? & $200 \\ Bjrn & ? & ? & ? & ? & $200 \\ Benny & ? & ? & ? & ? & $200 \\ Anni-Frid & ? & ? & ? & ? & $200 \end{tabular} Total ? ? ? ? $800 Table 1 - Labour Activity

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Database Security And Auditing Protecting Data Integrity And Accessibility

Authors: Hassan A. Afyouni

1st Edition

0619215593, 9780619215590

More Books

Students also viewed these Accounting questions

Question

5. Explain how ERISA protects employees pension rights.

Answered: 1 week ago

Question

8. Describe the main retirement benefits.pg 87

Answered: 1 week ago