Question

Problem 3-14A Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO3-2, LO3-3,...

Problem 3-14A Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO3-2, LO3-3, LO3-4]

Gino’s Restaurant is a popular restaurant in Boston, Massachusetts. 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 the following major activities:

  Activity Cost Pool

Activity Measure

  Serving a party of diners

     Number of parties served

  Serving a diner

     Number of diners served

  Serving drinks

     Number of drinks ordered

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, depends on the number of diners served or the number of drinks served.

  

  Data concerning these activities are shown below.

   

Serving a Party

Serving a Dinner

Serving Drinks

Total

  Total cost

$66,400

$102,000

$51,600

$220,000

  Total activity

8,000

parties

20,000

diners

43,000

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 was $220,000 and that 20,000 diners had been served. Therefore, the average cost per diner was $11.00 ($220,000 ÷ 20,000 diners = $11.00 per diner).

Required:

1.

Compute the activity rates for each of the three activities. (Round your answers to 2 decimal places.)

     

2.

According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

   

a.

A party of four 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 two drinks.


3.

Convert the total costs you computed in part (1) above to costs per diner. In other words, what is the average cost per diner for serving each of the following parties? (Do not round intermediate calculations. Round your final answers to 2 decimal places.)

   

a.

A party of four 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 two drinks.

Problem 3-14A Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO3-2, LO3-3, LO3-4] Gino’s Restaurant is a popular restaurant in Boston, Massachusetts. 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 the following major activities: Activity Cost Pool Activity Measure Serving a party of diners Number of parties served Serving a diner Number of diners served Serving drinks Number of drinks ordered ________________________________________ 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, depends on the number of diners served or the number of drinks served. Data concerning these activities are shown below. Serving a Party Serving a Dinner Serving Drinks Total Total cost $66,400 $102,000 $51,600 $220,000 Total activity 8,000 parties 20,000 diners 43,000 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 was $220,000 and that 20,000 diners had been served. Therefore, the average cost per diner was $11.00 ($220,000 ÷ 20,000 diners = $11.00 per diner). Required: 1. Compute the activity rates for each of the three activities. (Round your answers to 2 decimal places.) 2. According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) a. A party of four 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 two drinks. 3. Convert the total costs you computed in part (1) above to costs per diner. In other words, what is the average cost per diner for serving each of the following parties? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) a. A party of four 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 two drinks.

Homework Answers

Answer #1
1) Cost per unit of activity
Serving a party 8.3 per party
Serving a diner 5.1 per diner
serving drinks 1.2 per drink
(total cost/total activity)
2)
party of four diners who order three drinks in total 32.3 (8.3+4*5.1+3*1.2)
a party two diner who do not order any drink 18.5 (8.3+2*5.1+0)
party of one diner who order two drinks 15.8 (8.3+5.1+1.2*2)
3) party of four diners who order three drinks in total 8.08 (32.3/4)
a party two diner who do not order any drink 9.25 (18.5/2)
party of one diner who order two drinks 15.8 (15.8/1)
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Problem 4-14 Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO4-2, LO4-3,...
Problem 4-14 Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO4-2, LO4-3, LO4-4] Gino’s Restaurant is a popular restaurant in Boston, Massachusetts. 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 the following major activities: Activity Cost Pool Activity Measure Serving a party of diners Number of parties served Serving...
The Tavern is a popular restaurant located in State College. The owner of the restaurant has...
The Tavern is a popular restaurant located in State College. 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 the following major activities:   Activity Cost Pool Activity Measure   Serving a party of diners      Number of parties served   Serving a diner      Number of diners served   Serving drinks      Number of drinks ordered Some costs, such as...
The Tavern is a popular restaurant located in State College. The owner of the restaurant has...
The Tavern is a popular restaurant located in State College. 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 the following major activities:   Activity Cost Pool Activity Measure   Serving a party of diners      Number of parties served   Serving a diner      Number of diners served   Serving drinks      Number of drinks ordered Some costs, such as...
Activity Cost Pool Activity Measure Total Cost Total Activity Serving a party of diners Number of...
Activity Cost Pool Activity Measure Total Cost Total Activity Serving a party of diners Number of parties served $ 13,200 6,000 parties Serving a diner Number of diners served $ 111,760 12,700 diners Serving drinks Number of drinks ordered $ 24,240 10,100 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...
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the...
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 Activity Measure Total Cost Total Activity Serving a party of...
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the...
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 Activity Measure Total Cost Total Activity Serving a party of...
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the...
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 Activity Measure Total Cost Total Activity Serving a party of...
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the...
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 Activity Measure Total Cost Total Activity Serving a party of...
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the...
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 Activity Measure Total Cost Total Activity Serving a party of...
Hiram’s Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner of the...
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 Activity Measure Total Cost Total Activity Serving a party of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT