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what would be the overall margin on the order?

05 / 03 / 2018 Assignment

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Lifsey
Wedding Fantasy Company makes very elaborate wedding cakes to order. The
owner of the company has provided the following data concerning the activity
rates in its activity-based costing system:

Activity Cost Pools

Activity Rate

Size-related

$0.94 per guest

Complexity-related

$31.62 per
tier

Order-related

$55.70 per
order

  • The measure of activity for
    the size-related activity cost pool is the number of planned guests at
    the wedding reception. The greater the number of guests, the larger the
    cake.
  • The measure of complexity is
    the number of tiers in the cake.
  • The activity measure for the
    order-related cost pool is the number of orders. (Each wedding involves
    one order.)
  • The activity rates include
    the costs of raw ingredients, such as flour, sugar, eggs, and
    shortening. The activity rates don’t include the costs of purchased
    decorations, such as miniature statues and wedding bells, which are
    accounted for separately.

Data
concerning two recent orders are listed here:


Pyburn Wedding

Smith Wedding

Number of
reception guests

72

189

Number of
tiers on the cake

4

5

Cost of
purchased decorations for cake

$29.92

$68.75

Assuming that
the company charges $556.96 for the Smith wedding cake, what would be the
overall margin on the order?


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