Page 153 - F2 - MA Integrated Workbook STUDENT 2018-19

Accounting for overheads

Test your understanding 4

A hotel has completed its initial allocation and apportionment of overhead
costs and has established that the total budgeted annual overhead cost of its
linen services activity is $836,000

The cost unit used to plan and control costs in the hotel is an occupied room
night. The hotel expects the occupancy rate of its 400 rooms, which are
available for 365 nights each year, to be 85% for the forthcoming year.

To the nearest cent, the overhead absorption rate for the linen services activity
is:

$ per occupied room night

Illustrations and further practice

Now try TYU question 3 from Chapter 7

145