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. Total Cost $ 17,280 $ 106,600 $ 37,060 Total Activity 5,400 parties 13,000 diners 10,900 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. Activity Measure Number of parties served Number of diners served Number of drinks ordered 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 three diners who order four drinks in total. b. A party of three diners who do not order any drinks. c. A party of one diner who orders four drinks. Total Cost Average Cost per diner per diner per 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. Total Cost $ 17,280 $ 106,600 $ 37,060 Total Activity 5,400 parties 13,000 diners 10,900 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. Activity Measure Number of parties served Number of diners served Number of drinks ordered 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 three diners who order four drinks in total. b. A party of three diners who do not order any drinks. c. A party of one diner who orders four drinks. Total Cost Average Cost per diner per diner per diner
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
$ 17,280
$ 106,600
$ 37,060
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.
Total Activity
5,400 parties
13,000 diners
10,900 drinks
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 three diners who order four drinks in total.
b. A party of three diners who do not order any drinks.
c. A party of one diner who orders four drinks.
Total Cost
Average Cost
per diner
per diner
per diner
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