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 $ 12,240 $ 118,680 $ 27,040 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. Total Activity 5,100 parties 12,900 diners 10,400 drinks 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. a. A party of six diners who order three drinks in total. b. A party of two diners who do not order any drinks. c. A party of one diner who orders three drinks. 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.) Total Cost Average Cost per diner per diner per diner

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Chapter1: Financial Statements And Business Decisions
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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
$ 12,240
$ 118,680
$ 27,040
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.
Total Activity
5,100 parties
12,900 diners
10,400 drinks
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.
a. A party of six diners who order three drinks in total.
b. A party of two diners who do not order any drinks.
c. A party of one diner who orders three drinks.
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.)
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 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 $ 12,240 $ 118,680 $ 27,040 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. Total Activity 5,100 parties 12,900 diners 10,400 drinks 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. a. A party of six diners who order three drinks in total. b. A party of two diners who do not order any drinks. c. A party of one diner who orders three drinks. 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.) Total Cost Average Cost per diner per diner per diner
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