You run a restaurant, an event space and do catering for private events. You use a single, group-wide overhead allocation rate, with pricing at 145% of cost. You can make improvements by implementing activity-based costing using the following information. Proposed allocation bases for overhead are:

Revenue (net $2,400,600):

Restaurant $1,326,000; Events $3,120,000; Catering $1,170,000; Total $5,616,000

Food & drink costs: Restaurant $624,000; Events $1,144,000; Catering $546,000; Total $2,314,000

Direct labour cost: Restaurant $234,000; Events $374,400; Catering $156,000; Total $764,400

Depreciation: Restaurant $28,000; Events $23,000; Catering $13,000; Total $64,000

Transport costs: Restaurant $15,000; Events $18,000; Catering $40,000; Total $73,000

Overhead costs (net $1,420,600):

Hospitality support staff $385,000; Marketing costs $350,000; Cleaning $60,000; Maintenance $45,000; Administration $60,000; Utilities $80,000; Total $980,000

Number of guests per year: Restaurant 15,600; Events 20,800; Catering 15,600

Number of services per year: Restaurant 629; Events 213; Catering 158

Proposed allocation bases for overhead are: Maintenance, Depreciation, Cleaning, Number of services per year, Hospitality support Number of guests per year, Marketing, Revenue, Utilities, Food & drink costs, Administration.

Using direct labour costs to allocate overhead costs, what are the budgeted costs per service for restaurant, events and catering? Show this data in a profitability report for each service type.

Answer rating: 100% (QA)

To calculate the budgeted costs per service for restaurant events and catering using direct labor costs to allocate overhead costs we need to follow t... View the full answer