Greenlife is a health resort that offers a range of programs for health-conscious managers. Managers who participate are provided with a tailored program, consisting of a series of activities. A job costing system s used to calculate the cost of each program. The manager of Greenlife has designed the following programs for managers at the local water authority:
Program A:……… Health check, 2-hour bushwalk, 30-minute yoga class, 15-minute massage
Program B:……… Health check, 1-hour gym workout, 30-minute massage
Program C:……… Health check, 2-hour bushwalk, 60-minute yoga class, 2-hour gym workout
Program D:………1-hour gym workout, 30-minute yoga class, 2-hour bushwalk
The following labour costs and overheads apply:
1. Determine the total cost of each of the programs.
2. How might the resort managers use these total costs?
3. Explain why there is a different overhead rate for each class of labour.
4. Calculate the price of each program using the chargeout rates.