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Budgeted Overhead Cost for the Marchi Family Inn

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Marchi Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion. The Inn's guests appreciate its gourmet breakfasts and individually decorated rooms. The Inn's overhead budget for the most recent month appears below:

Activity level 65 Guests
Variable overhead costs:
Supplies $ 156
Laundry $ 364
Fixed overhead costs:
Utilities $ 250
Salaries and wages $4,480
Depreciation $1,330
Total overhead cost $6,580

The Inn's variable overhead costs are driven by the number of guests. What would be the total budgeted overhead cost for a month if the activity level is 70 guests?

Question 1 answers
a. $42,460.00
b. $6,620.00
c. $7,086.15
d. $6,580.00

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Solution Summary

Your tutorial is attached in Excel. Click inside cells to see the computations. This is now a template for other similar problems.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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