locust lodge a restored 1920s lodge located in alabama caters and serves special eve 542833

Job Order Costing in a Service Organization

Locust Lodge, a restored 1920s lodge located in Alabama, caters and serves special events for businesses and social occasions. The company earns 60 percent of its revenue from weekly luncheon meetings of local clubs like Rotary. The remainder of its business comes from bookings for weddings and receptions.

Locust Lodge uses job order cost cards to keep track of the costs incurred. Job costs are separated into three categories: food and beverage, labor, and facility overhead. The facility overhead cost for weekly events is 10 percent of food and beverage costs, the facility overhead cost for sit-down receptions is 40 percent of food and beverage costs, and the facility overhead cost for stand-up receptions is 20 percent of food and beverage costs. Accumulated costs for three Locust Lodge clients in the current quarter are as follows:

The number of attendees served at Tuesday Club meetings is usually 200 per month. The Doar- Turner parties paid for 500 guests. The organizers of the reception for the new president paid for 1,000 invitees.

Required

1. Using the format shown in this chapter’s Review Problem, create a job order cost card for each of the three clients.

2. Calculate the total cost of each of the three jobs on its job order cost card.

3. Calculate the cost per attendee for each job.

4. Rank the jobs in order from most costly to least costly based on each job’s total cost and on the cost per attendee. From the rankings of cost, what observations are you able to make?

5. Speculate on the price that Locust Lodge should charge for such jobs.