Finance statement questions

Room Type Standard 

Guest Room Junior Suite

Presidential  Suite

Type Cost

Volume 150 110 25 Depreciation $3,200,000  Price $140,000  $240,000  $1,050,000  Maintenance $1,800,000 

Unit costs Purchasing $320,000 

Direct materials $30,000  $92,000  $310,000  Inspection $850,000 

Direct labor $54,000  $85,000  $640,000  Indirect  materials

$490,000 

Manufacturing $30,000  $30,000  $30,000  Supervision $1,700,000  overhead Supplies $190,000 

Total unit cost $114,000  $207,000  $980,000  Total 

manufacturing  overhead cost

$8,550,000 

Unit gross profit $26,000  $33,000  $70,000 

Direct labor hours 1,200 1,300 5,940

Rate per hour $45.00  $65.38  $107.74 

Choice Hotels’ controller developed the following data for use in activity‐based costing: Complete the calculations to help you answer the questions below

Manufacturing overhead Amount Cost driver Standard Guest 

Room Junior Suite

Presidential  Suite

Total Square Feet Cost per square 

foot Standard Guest 

room Junior Suite

Presidential  Suite

Check

Depreciation $3,200,000  Square feet 50,000 30,000 30,000 110,000  $              29.09   $             1,454,545   $          872,727   $         872,727   $         3,200,000 

Maintenance $1,800,000  Direct labor 

hours 180,000 143,000 148,500 471,500  $                3.82   $                 687,169   $          545,917   $         566,914   $         1,800,000 

Purchasing $320,000  # of purchase 

orders 2,500 1,500 9,000 13,000  $              24.62   $                   61,538   $            36,923   $         221,538   $            320,000 

Inspection $850,000  # of inspections 1,000 850 3,500 5,350  $            158.88   $                 158,879   $          135,047   $         556,075   $            850,000 

Indirect $490,000  Units 

manufactured 150 110 25 285  $        1,719.30   $                 257,895   $          189,123   $           42,982   $            490,000 

Supervision $1,700,000  # of inspections 1,000 850 3.5 1,854  $            917.18   $                 917,184   $          779,606   $              3,210   $         1,700,000 

Supplies $190,000  Units 

manufactured 150 110 25 285  $            666.67   $                 100,000   $            73,333   $           16,667   $            190,000 

Total $8,550,000  234,800 176,420 191,054 492,274 3,490  $        3,637,209.02   $ 2,632,676.38   $2,280,113.60   $         8,550,000 

Overhead Costs

Note : Manufacturing overhead costs are fixed. They  do not vary with the volume of manufacturing  activity.

Choice Hotels Sales, Production, and Cost Information