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Hiram's Lakeside is a popular restaurant located on Lake Washington In Seattle. The restaurant's owner wants to better understand his costs and hired a student intern to conduct an activity-based costing study. The intern identified three activities, completed the first- stage cost allocations and gathered the activity measure data shown below. Activity Cost Pool Serving a party of diners Serving a diner Serving drinks Activity Measure Number of parties served Number of diners served Number of drinks ordered Total Cost $ 18,290 $ 112,840 Total Activity 5,900 parties $ 33,990 12,400 diners 10,300 drinks The above costs exclude organization-sustaining costs such as rent, property taxes, and top-management salaries. Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depend on the number of diners served or the number of drinks served. Prior to the activity-based costing study, the owner knew very little about the restaurant costs. She only knew the total cost for the month (including organization-sustaining costs) was $180,000 and 12,000 diners had been served. Therefore, the average cost per diner was $15. Required: 1 and 2. According to the activity-based costing system, what is the total cost and average cost per diner for serving each of the following parties of diner

Hiram's Lakeside is a popular restaurant located on Lake Washington In Seattle. The restaurant's owner wants to better understand his costs and hired a student intern to conduct an activity-based costing study. The intern identified three activities, completed the first- stage cost allocations and gathered the activity measure data shown below. Activity Cost Pool Serving a party of diners Serving a diner Serving drinks Activity Measure Number of parties served Number of diners served Number of drinks ordered Total Cost $ 18,290 $ 112,840 Total Activity 5,900 parties $ 33,990 12,400 diners 10,300 drinks The above costs exclude organization-sustaining costs such as rent, property taxes, and top-management salaries. Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depend on the number of diners served or the number of drinks served. Prior to the activity-based costing study, the owner knew very little about the restaurant costs. She only knew the total cost for the month (including organization-sustaining costs) was $180,000 and 12,000 diners had been served. Therefore, the average cost per diner was $15. Required: 1 and 2. According to the activity-based costing system, what is the total cost and average cost per diner for serving each of the following parties of diner

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 39P: Randy Harris, controller, has been given the charge to implement an advanced cost management system....
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Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The restaurant's owner wants to better understand his costs and hired a student intern to conduct an activity-based costing study. The Intern identified three activities, completed the first- stage cost allocations and gathered the activity measure data shown below. Activity Cost Pool Serving a party of diners Serving a diner Serving drinks Activity Measure Number of parties served Number of diners served Number of drinks ordered Total Cost $ 18,290 $ 112,840 $ 33,990 Total Activity 5,900 parties 12,400 diners 10,300 drinks The above costs exclude organization-sustaining costs such as rent, property taxes, and top-management salaries. Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depend on the number of diners served or the number of drinks served. Prior to the activity-based costing study, the owner knew very little about the restaurant costs. She only knew the total cost for the month (including organization-sustaining costs) was $180,000 and 12,000 diners had been served. Therefore, the average cost per diner was $15. Required: 1 and 2. According to the activity-based costing system, what is the total cost and average cost per diner for serving each of the following parties of diners? Note: Round your Intermediate calculations to 2 decimal places. Round your Total Cost final answers to 2 decimal places and your Average Cost final answers to 3 decimal places. a. A party of four diners who order five drinks in total. b. A party of three diners who do not order any drinks. c. A party of one diner who orders two drinks. Total Cost Average Cost per diner per diner per diner
Transcribed Image Text:Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The restaurant's owner wants to better understand his costs and hired a student intern to conduct an activity-based costing study. The Intern identified three activities, completed the first- stage cost allocations and gathered the activity measure data shown below. Activity Cost Pool Serving a party of diners Serving a diner Serving drinks Activity Measure Number of parties served Number of diners served Number of drinks ordered Total Cost $ 18,290 $ 112,840 $ 33,990 Total Activity 5,900 parties 12,400 diners 10,300 drinks The above costs exclude organization-sustaining costs such as rent, property taxes, and top-management salaries. Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such as washing plates and glasses, depend on the number of diners served or the number of drinks served. Prior to the activity-based costing study, the owner knew very little about the restaurant costs. She only knew the total cost for the month (including organization-sustaining costs) was $180,000 and 12,000 diners had been served. Therefore, the average cost per diner was $15. Required: 1 and 2. According to the activity-based costing system, what is the total cost and average cost per diner for serving each of the following parties of diners? Note: Round your Intermediate calculations to 2 decimal places. Round your Total Cost final answers to 2 decimal places and your Average Cost final answers to 3 decimal places. a. A party of four diners who order five drinks in total. b. A party of three diners who do not order any drinks. c. A party of one diner who orders two drinks. Total Cost Average Cost per diner per diner per diner
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