Question

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 a diner

Number of diners served

Serving drinks

Number of drinks ordered

A group of diners who ask to sit at the same table is 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.

  

Data concerning these activities are shown below:

   

Serving a Party

Serving a Diner

Serving Drinks

Total

Total cost

$49,700

$80,000

$73,100

$202,800

Total activity

7,000

parties

10,000

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 $202,800 and that 10,000 diners had been served. Therefore, the average cost per diner was $20.28 ($202,800 ÷ 10,000 diners = $20.28 per diner).

Required:

1. Compute the activity rates for each of the three activities.

2. According to the activity-based costing system, what is the total cost of serving each of the following parties of diners?

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 lone diner who orders two drinks.

3. Convert the total costs you computed in part (2) above to costs per diner. In other words, what is the average cost per diner for serving each of the following parties?

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 lone diner who orders two drinks.

Required 1

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

Cost per Unit of Activity

Serving a Party

  

per party

Serving a Diner

per diner

Serving Drinks

per drink

According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? (Round your intermediate calculations and final answers to 2 decimal places.)

Total

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 lone diner who orders two drinks

Convert the total costs you computed in part (2) above to costs per diner. In other words, what is the average cost per diner for serving each of the following parties? (Round your intermediate calculations and final answers to 2 decimal places.)

Average Cost

a.

A party of four diners who order three drinks in total

per diner

b.

A party of two diners who do not order any drinks

per diner

c.

A lone diner who orders two drinks

per diner

0 0
Add a comment Improve this question Transcribed image text
Answer #1

1.

Activity Cost pool
Serving a party of diners $                49,700.00 7000 parties $ 7.10 per party
Serving a diner $                80,000.00 10000 diners $ 8.00 per diner
Serving drinks $                73,100.00 43000 drinks $ 1.70 per drink
$             2,02,800.00

2.

Total Cost
a A party of four diners who orders three drinks $                        44.20 =1*7.1+4*8+3*1.7
b A party of two diners who do not order any drinks $                        23.10 =1*7.1+2*8+0*1.7
c A lone diner who orders two drinks $                        18.50 =1*7.1+1*8+2*1.7

3.

Total Cost
a A party of four diners who orders three drinks $                        11.05 =44.20/4
b A party of two diners who do not order any drinks $                        11.55 =23.10/2
c A lone diner who orders two drinks $                        18.50 =18.5/1
Add a comment
Know the answer?
Add Answer to:
Problem 4-14 Compute and Use Activity Rates to Determine the Costs of Serving Customers [LO4-2, LO4-3,...
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. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Problem 4-14 Compute and Use Activity Rates to Determine the Costs of Serving Customers (L04-2, LO4-3,...

    Problem 4-14 Compute and Use Activity Rates to Determine the Costs of Serving Customers (L04-2, LO4-3, L04-4) 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 Serving a party of diners Serving a diner Serving drinks Activity Measure...

  • accounting experts please help! thunbs up for right answers Problem 4-14 Compute and Use Activity Rates...

    accounting experts please help! thunbs up for right answers Problem 4-14 Compute and Use Activity Rates to Determine the costs of Serving Customers [LO4-2, L04-3, L04-4) 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 Serving a party...

  • Activity Cost Pool Activity Measure Serving a party of Serving a diner Serving drinks Number of...

    Activity Cost Pool Activity Measure Serving a party of Serving a diner Serving drinks Number of parties Number of diners Number of drinks diners served served 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 conceming these activities are shown below Serving a Party...

  • Gino’s Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been...

    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 A group of diners who...

  • Gino's Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been...

    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 Serving a party of diners Serving a diner Serving drinks Activity Measure Number of parties served Number of diners served Number of drinks ordered A group of diners who...

  • Gino's Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been...

    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 Serving a party of diners Serving a diner Serving drinks Activity Measure Number of parties served Number of diners served Number of drinks ordered A group of diners who...

  • Gino’s Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been...

    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 A group of diners who...

  • Gino’s Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been...

    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 A group of diners who...

  • Gino's Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been...

    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 Serving a party of diners Serving a diner Serving drinks Activity Measure Number of parties served Number of diners served Number of drinks ordered A group of diners who...

  • Gino's Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been...

    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 Serving a party of diners Serving a diner Serving drinks Activity Measure Number of parties served Number of diners served Number of drinks ordered A group of diners who...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT