Sixty employees (all CPAS) of a local public accounting firm eat lunch at least twice weekly at a very popular pizza restaurant. The pizza restaurant recently began offering discounts for groups of 15 or more. Groups would be seated in a separate room, served individual bowls of salad costing $1.60 each, pitchers of root beer costing $3.00 each (each pitcher has a five-glass capacity), and medium, two-topping pizzas for $11.00 (10 slices each). The food would have to be ordered in advance Thirty of the CPAS commit to eating two slices of pizza, four glasses of root beer, and one bowl of salad [a consumption pattern of (2,4,1)]. The other 30 are more hearty eaters and commit to eight slices of pizza, four glasses of root beer, and one bowl of salad [a consumption pattern of (8,4,1)]. Each member of the group must pay an assessed amount for the lunch.
Sixty employees (all CPAS) of a local public accounting firm eat lunch at least twice weekly at a very popular pizza restaurant. The pizza restaurant recently began offering discounts for groups of 15 or more. Groups would be seated in a separate room, served individual bowls of salad costing $1.60 each, pitchers of root beer costing $3.00 each (each pitcher has a five-glass capacity), and medium, two-topping pizzas for $11.00 (10 slices each). The food would have to be ordered in advance Thirty of the CPAS commit to eating two slices of pizza, four glasses of root beer, and one bowl of salad [a consumption pattern of (2,4,1)]. The other 30 are more hearty eaters and commit to eight slices of pizza, four glasses of root beer, and one bowl of salad [a consumption pattern of (8,4,1)]. Each member of the group must pay an assessed amount for the lunch.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Focused Value Streams, Product Costing
Sixty employees (all CPAS) of a local public accounting firm eat lunch at least twice weekly at a very popular pizza restaurant. The pizza restaurant recently began offering discounts for groups of 15 or more. Groups would be seated in a separate
room, served individual bowls of salad costing $1.60 each, pitchers of root beer costing $3.00 each (each pitcher has a five-glass capacity), and medium, two-topping pizzas for $11.00 (10 slices each). The food would have to be ordered in advance.
Thirty of the CPASs commit to eating two slices of pizza, four glasses of root beer, and one bowl of salad [a consumption pattern of (2,4,1)]. The other 30 are more hearty eaters and commit to eight slices of pizza, four glasses of root beer, and one
bowl of salad [a consumption pattern of (8,4,1)]. Each member of the group must pay an assessed amount for the lunch.
Required:
1. Determine the total number of pizzas, pitchers of root beer, and salads that must be ordered for the 60 employees.
Pizza
Root beer
Salads
30
Group A
Group B
What does this tell you?
pizzas
pitchers
bowls
2. One of the CPAS offered to determine the amount that each should pay. He suggested that the easiest way is to assign the average cost to each person eating in the group. Based on this suggestion, how much would each CPA pay for lunch? If
required, round your answer to the nearest cent.
$
per individual
3. One CPA objected to using average cost, noting that half of the CPAS are much lighter eaters than the other half. Based on the large differences in consumption behaviors, he suggested forming two groups: one for the light eaters (Group A) and
one for the heavier eaters (Group B). Calculate the average lunch cost for each CPA for each group. If required, round your answers to the nearest cent.
Group A
per individual
Group B
per individual
Calculate the cost for each CPA that would be assigned using ABC. If required, round your answers to the nearest cent.
per individual
per individual](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8952a85a-85f1-4c32-8b45-c088a1def42e%2Fbb898dae-2a78-4e64-a1e1-d0a7e253b6fc%2Frgcd93_processed.png&w=3840&q=75)
Transcribed Image Text:Focused Value Streams, Product Costing
Sixty employees (all CPAS) of a local public accounting firm eat lunch at least twice weekly at a very popular pizza restaurant. The pizza restaurant recently began offering discounts for groups of 15 or more. Groups would be seated in a separate
room, served individual bowls of salad costing $1.60 each, pitchers of root beer costing $3.00 each (each pitcher has a five-glass capacity), and medium, two-topping pizzas for $11.00 (10 slices each). The food would have to be ordered in advance.
Thirty of the CPASs commit to eating two slices of pizza, four glasses of root beer, and one bowl of salad [a consumption pattern of (2,4,1)]. The other 30 are more hearty eaters and commit to eight slices of pizza, four glasses of root beer, and one
bowl of salad [a consumption pattern of (8,4,1)]. Each member of the group must pay an assessed amount for the lunch.
Required:
1. Determine the total number of pizzas, pitchers of root beer, and salads that must be ordered for the 60 employees.
Pizza
Root beer
Salads
30
Group A
Group B
What does this tell you?
pizzas
pitchers
bowls
2. One of the CPAS offered to determine the amount that each should pay. He suggested that the easiest way is to assign the average cost to each person eating in the group. Based on this suggestion, how much would each CPA pay for lunch? If
required, round your answer to the nearest cent.
$
per individual
3. One CPA objected to using average cost, noting that half of the CPAS are much lighter eaters than the other half. Based on the large differences in consumption behaviors, he suggested forming two groups: one for the light eaters (Group A) and
one for the heavier eaters (Group B). Calculate the average lunch cost for each CPA for each group. If required, round your answers to the nearest cent.
Group A
per individual
Group B
per individual
Calculate the cost for each CPA that would be assigned using ABC. If required, round your answers to the nearest cent.
per individual
per individual
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Step 1: Introduction of activity based costing
VIEWStep 2: Computation of total number required units
VIEWStep 3: Computation of cost per CPA (average cost)
VIEWStep 4: Computation of average lunch cost per CPA (group wise)
VIEWStep 5: Computation of average lunch cost per CPA (Using ABC)
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