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Cool Destinations Ltd owns a chain of backpacker lodges located throughout Australia. The
company’s profits have declined over the past year. In an attempt to isolate the causes of
poor performance, the company has recently introduced a costing system to estimate the
cost of its major services at each lodge. The company intends to use this information to
review the service pricing structure and assess the profitability of its various service lines at
each lodge.
Snowy Mountains Lodge is one of the busiest lodges in the Cool Destination chain. One of its
main products is the provision of accommodation, which involves three main processes:
reception, room maintenance and the collection of payments for accommodation. The
lodge charges backpackers $40 per day for single bedrooms (double rooms are not
available).
Another major product is the provision of evening meals, which involves a variety of
ingredients and two major processes: kitchen service (cooking and clean-up) and table
service. The price of the evening meals varies between $5 and $15, depending on the menu
items selected.
A third product is the provision of a range of one-day and half-day tours. The lodge hires
guides and provides equipment and transportation for a range of activities such as whitewater rafting, canyoning, canoeing and mountain trekking. Picnic lunches, purchased from
the local bakery, are also provided for full-day tours. Tour prices vary considerably,
depending on the activities included.
In the past year, the Snowy Mountains Lodge provided accommodation to 2 400
backpackers, who stayed an average of 5 nights each, purchased 8 000 evening meals, 300
one-day tours and 400 half-day tours. The following data relate to the Snowy Mountains
Lodge for the past year.

Attachments:

Assignment-20….pdf