Lifesey 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 f 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 measures for the order-related cost pool is the number of orders (each wedding involves one order)
-Activity rates include cost of raw ingredients such as flour, sugar, eggs, and shortening. Activity-rates don’t include cost of purchased decorations such as miniature statues and wedding bells which are accounted separately.
Data concerning recent orders listed here
Pybum wedding Smith wedding
72 189 Number of reception guests
4 5 Number of tiers on cake
$29.92 $68.75 Cost of purchased decor for cake
Assuming that all cost listed above are avoidable costs in the event that an order is turned down, which amount would the company have to charge for the Pybum wedding cake to just break even?
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