Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified three major activities and then completed the first-stage allocations of costs to the activity cost pools. The results appear 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 $ 14,250 $ 102,920 $ 29,700 Total Activity 5,700 parties 12,400 diners 11,000 drinks The above costs include all of the costs of the restaurant except for 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 costs of the restaurant. She knew that the total cost for me month (including organization-sustaining costs) was $180,000 and that 12,000 diners had been served. Therefore, the average ost per diner was $15. equired: B2. According to the activity-based costing system, what is the total cost and average cost per diner for serving each of the following Total Cost final answers to 2 decimal
Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation with the owner, identified three major activities and then completed the first-stage allocations of costs to the activity cost pools. The results appear 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 $ 14,250 $ 102,920 $ 29,700 Total Activity 5,700 parties 12,400 diners 11,000 drinks The above costs include all of the costs of the restaurant except for 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 costs of the restaurant. She knew that the total cost for me month (including organization-sustaining costs) was $180,000 and that 12,000 diners had been served. Therefore, the average ost per diner was $15. equired: B2. According to the activity-based costing system, what is the total cost and average cost per diner for serving each of the following Total Cost final answers to 2 decimal
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the restaurant has been trying to better
understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study. The intern, in consultation
with the owner, identified three major activities and then completed the first-stage allocations of costs to the activity cost pools. The
results appear 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
$ 14,250
$ 102,920
$ 29,700
Total Activity
5,700 parties
12,400 diners
11,000 drinks
The above costs include all of the costs of the restaurant except for 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 costs of the restaurant. She knew that the total cost for
the month (including organization-sustaining costs) was $180,000 and that 12,000 diners had been served. Therefore, the average
cost per diner was $15.
Required:
1&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? (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 six diners who order five drinks in total.
b. A party of two 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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