Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The restaurant's owner wants to better understand costs and hired a student intern to conduct an activity-based costing study. The intern identified three activities, completed the first tage cost allocations and gathered the activity measure data shown below. Activity Cost Pool Serving a party of diners Serving a diner Total Cost $ 17,920 $ 112,140 Serving drinks $ 36,720 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 Activity Measure Number of parties served Number of diners served Number of drinks ordered Total Activity 5,600 parties 12,600 diners 10,800 drinks
Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The restaurant's owner wants to better understand costs and hired a student intern to conduct an activity-based costing study. The intern identified three activities, completed the first tage cost allocations and gathered the activity measure data shown below. Activity Cost Pool Serving a party of diners Serving a diner Total Cost $ 17,920 $ 112,140 Serving drinks $ 36,720 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 Activity Measure Number of parties served Number of diners served Number of drinks ordered Total Activity 5,600 parties 12,600 diners 10,800 drinks
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Exercise 7-14 (Algo) Calculating and Interpreting Activity-Based Costing Data [LO7-3, LO7-4]
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
Activity Measure
Number of parties served
Number of diners served
Number of drinks ordered
Total Cost
$ 17,920
$ 112,140
Serving drinks
$ 36,720
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?
Total Activity
5,600 parties
12,600 diners
10,800 drinks
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 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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9975a29c-9baa-4cd9-8e56-6b4f6bbc71d5%2F94e90e6c-77b4-43c2-a4da-0ba76dfea086%2Ft57tn4j_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 7-14 (Algo) Calculating and Interpreting Activity-Based Costing Data [LO7-3, LO7-4]
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
Activity Measure
Number of parties served
Number of diners served
Number of drinks ordered
Total Cost
$ 17,920
$ 112,140
Serving drinks
$ 36,720
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?
Total Activity
5,600 parties
12,600 diners
10,800 drinks
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 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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VIEWStep 4: Calculation of total cost and average cost per diner for Part (B)
VIEWStep 5: Calculation of total cost and average cost per diner for Part (C)
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