Question

Assume that Hotel Excellent uses activity-based costing to allocate hotel overhead to guests. In Hotel Excellent, if the budgeted costs for the housekeeping department are $900,000, and total estimated activity-base usage is 27,000 hours, calculate the housekeeping department's activity rate. (Round answer to two decimal places.)

a. $30.00 per housekeeping hour
b. $45.00 per housekeeping hour
c. $33.33 per housekeeping hour
d. $35.88 per housekeeping hour

Answer 1

Answer:

c. $33.33 per housekeeping hour

Explanation:

The housekeeping department's activity rate is how much each housekeeping hour costs.

This question can be solved by a simple rule of three.

27000 hours cost $900000. How much does 1 hour cost?

27,000 hours - $900,000.

1 hour - $x.

$27000x = 900000$

$x = \frac{900000}{27000}$

$x = 33.33$

So the correct answer is:

c. $33.33 per housekeeping hour