Holiday Packages Service Costing – Accounting & Finance Assignment Help

Assignment Task

Task 

Question 1: Service Costing & ABC 

Part A
African Adventure Ltd offers a series of holiday packages aimed at families, seniors, and corporate groups. The financial controller is preparing for the annual board meeting and is concerned about the loss the business sustained in the past year. He has examined the profits for each of the three departments of the business and it seems that the corporate department is the source of the problem.
The financial controller looked at the three packages offered by the corporate department to establish which are profitable or not profitable. The sales and direct cost of each package for the last year are as follows:

Required:
(i) Calculate the profit per package and the total profitability of each of the three corporate packages. 
(ii) Compare the profitability of the three corporate packages.
(iii) Do you consider that the allocation of the corporate department overhead using actual sales revenue as appropriate? Can you suggest a better method? 

Part B
Required: Refer to Part A Case Study– Jack’s Dog Sanctuary. Complete the following:
(i) Determine an activity driver for each cost pool your group identified in Part A. Explain your choice. 
(ii) Using the activity drivers, you identified in part (i) calculate the direct cost per unit of activity driver for each pool and explain what the cost per unit of activity driver for each pool means. Show ALL your workings. 

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