Tuesday, 24 July 2012

The Empire Hotel is a four-star hotel located in downtown Seattle.

The Empire Hotel is a four-star hotel located in downtown Seattle.

Required:
For each of the following costs incurred at the Empire Hotel, indicate whether it would most likely be a direct cost or an indirect cost of the specified cost object.

                  Cost   Cost Object         Direct cost/indirect cost
Ex.   Room service beverages A particular hotel guest   Direct cost
1.   The salary of the head chef The hotel’s restaurant   Direct cost
2.   The salary of the head chef A particular restaurant customer   Indirect cost
3.   Room cleaning supplies A particular hotel guest   Indirect cost
4.   Flowers for the reception desk A particular hotel guest   Indirect cost
5.   The wages of the doorman A particular hotel guest   Indirect cost
6.   Room cleaning supplies The housecleaning department   Direct cost
7.   Fire insurance on the hotel building The hotel's gym   Indirect cost
8.   Towels used in the gym The hotel's gym   Direct cost



Explanation:
Note: The room cleaning supplies would most likely be considered an indirect cost of a particular hotel guest because it would not be practical to keep track of exactly how much of each cleaning supply was used in the guest’s room.