Question

Jane's Cookhouse is a popular restaurant located in a scenic setting. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an ABC study. The intern, in consultation with the owner, identified three major activities. The intern then completed the first stage allocations of costs to the activity cost pools, using data from last month's operations. The results appear below: Activity Cost Pool Serving a party of diners Total Cost $ 17,985 Total Activity 5,450 parties Serving a diner Activity Measure Number of parties served Number of diners served Number of drinks ordered $112,140 13,350 diners Serving a drink $38,150 10,900 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. A group of diners who ask to sit at the same table are counted as a party. Some costs, such as the costs of cleaning linen, are the same whether one person is at a table or the table is full. Other costs, such as washing dishes, depend on the number of diners served. Prior to the ABC 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 $240,300 and that 13,350 diners had been served. Therefore, the average cost per diner was $18.

Answer 1

Activity Rate = Overhead Cost/Total Activity
Serving a party of diners	3.3	per party
Serving a diner	8.4	per diner
Serving drinks	3.5	per drink
1.a.
Cost Pool	ABC Cost = Activity Rate*Driver Consumption
Serving Parties	3.30
Serving Diners	42.00
Serving Drinks	14.00
Total	59.30
b.
Cost Pool	ABC Cost = Activity Rate*Driver Consumption
Serving Parties	3.30
Serving Diners	16.80
Serving Drinks	0.00
Total	20.10
c.
Cost Pool	ABC Cost = Activity Rate*Driver Consumption
Serving Parties	3.30
Serving Diners	8.40
Serving Drinks	7.00
Total	18.70
Average Cost per Diner = Total Cost/Number of Diners
a.	11.86
b.	10.05
c.	18.7

=17985/5450 =112140/13350 =38150/10900 per party per diner per drink А 1 Activity Rate = Overhead Cost/Total Activity 2 Serving a party of diners 3 Serving a diner 4 Serving drinks 5 6 1.a. 7 Cost Pool 8 Serving Parties 9 Serving Diners 10 Serving Drinks 11 Total ABC Cost = Activity Rate*Driver Consumption =$B$2 =$B$3*5 =$B$4*4 =SUM(B8:B10) 12 13 b. 14 Cost Pool 15 Serving Parties 16 Serving Diners 17 Serving Drinks 18 Total ABC Cost = Activity Rate Driver Consumption =$B$2 =$B$3*2 =$B$4*0 =SUM(B15:B17) 19 20 C. 21 Cost Pool 22 Serving Parties 23 Serving Diners 24 Serving Drinks 25 Total 26 27 Average Cost per Diner = Total Cost/Number of Diners 28 a. 29 b. 30 C. ABC Cost = Activity Rate Driver Consumption =$B$2 -ŠR$3*1 =$B$4*2 =SUM(B22:B24) =B11/5 =B18/2 =B25/1