Activty-based Costing. Kaysi Hoffman,the manager of Wilwater Adventurers uses activity-based costing to compute the costs of his raft trips. Each raft holds six paying customers and a guide. The company offers two types of raft trips--three-day float trips for beginners and three-day whitewater trips for seasoned rafters. The breakdown of the costs is a follows:
Activites (with cost drivers) Float Trip Costs Whitewater Trip Costs
Advertising (trips) $215 per trip $215 per trip
Permit to Use the River (trips) 30 per trip 50 per trip
Equipment Use (trips, people) 20 per trip + $5 40 per trip + $8
per person (including guides)
Insurance (trips) 75 per trip 127 per trip
Paying Guides (trips, guides) 300 400
per trip per guide
Food (people) 60 60
per person (including guides)
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a. Compute the cost of a fourth raft. 28-person (including four guides) float trip.
b. Compute the cost of a fourth raft. 28-person (including four guides) whitewater trip.
c. Recommend a minimum price per customer to the manager if she wants to cover her costs.