Question

Le Château Joyal is an historic hotel in the heart of old Quebec City. It is owned by Riel Hotels, which operates additional properties in Halifax, Montreal, and Winnipeg. Le Château Joyal has 9 floors, with approximately 20 rooms per floor. Facilities also include a workout room, restaurant, and pool. The hotel is organized into 5 departments: front desk, engineering, housekeeping, food & beverage, and customer relations. As part of its operation, Le Château Joyal regularly incurs the following costs:
General manager’s salary
Housekeeping supplies
Utility costs
Amortization on workout room equipment
Advertising
Food and beverage costs
Amortization on restaurant equipment

Advertising for the Riel Hotels chain is best described as a(n):

A) Facility-sustaining cost

B) Organization-sustaining cost

C) Product-sustaining cost

D) Batch-level cost

From the perspective of Riel Hotels, advertising specifically for Le Château Joyal is best described as a(n):

A) Unit-level cost

B) Customer-sustaining cost

C) Product-sustaining cost

D) Batch-level cost

Answer 1

Advertising for the Riel Hotels chain is best described as a(n):B) Organization-sustaining cost

Since, the Riwl Hotels is a chain of hotels with properties elsewhere offering various facilities, the expenses incurred on advertising is Organization sustaining cost.

From the perspective of Riel Hotels, advertising specifically for Le Château Joyal is best described as a(n):A) Unit-level cost

Le Chateau Joyal is only a unit in the chain of Riel Hotels as it has other hotels also under its name. Hence, from the perspective of Riel Hotels, advertising expenses are Unit level costs.

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