Mandalay Hotel Bases Its Budgets on Guest-Days -What Is the Expected Total Fixed Overhead Cost at an Budget

Mandalay Hotel bases its budgets on guest-days. The hotel's static budget for August appears below:
$\begin{array} { | l | r | } \hline \text { Budgeted number of guest-days } & 4,300 \\\hline \text { Budgeted variable overhead costs: } & \\\hline \text { Supplies (@\$.60 per guest-day) } & \$ 41,280 \\\hline \text { Laundry ( @9.40 per guest-day) } & \underline{ 4 0 , 4 2 0 } \\\hline \text { Total variable overhead cost } & 81,700 \\\hline \text { Budgeted fixed overhead costs: } & \\\hline \text { Wages and salaries } & 57,190 \\\hline \text { Occupancy costs } & \underline { 52,030 } \\\hline \text { Total fixed overhead cost } & 109,220 \\\hline \text { Total budgeted overhead cost } & \$ 190,920 \\\hline\end{array}$

-What is the expected total fixed overhead cost at an activity level of 5,500 guest-days per month?

A) $139,700
B) $190,920
C) $244,200
D) $109,220

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free