Question

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 Serving a party of diners Serving a diner Serving drinks Total Activity Measure Cost Total Activity Number of parties $ 14.850 5,500 parties served Number of diners served $ 108,900 12,100 diners Number of drinks $ 29,580 10,200 drinks ordered 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 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 costs of the restaurant. She knew that the total cost for the month (including organization-sustaining costs) was $180.000 and that 12.000 diners had been served. Therefore, the average cost per diner was $15. Required: 1&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? (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 five drinks in total. b. A party of two diners who do not order any drinks. c. A party of one diner who orders four drinks. Total Cost S 56.40 38.70 Is 14.60 $ $ $ Average Cost 282.000 per diner 9.675 per diner 14.600 per diner

Answer 1

Answer -

Interstate Trucking

Customer Margin---ABC Analysis

	Calculation	Amount ($)	Amount ($)
Sales	2100 seats * $141.40 per unit	-	296940
Costs:	-	-	-
Direct materials	$103 per unit * 2100 units	216300	-
Direct labor	$14 per unit * 2100 units	29400	-
Supporting direct labor	$8 per direct labor-hour * 0.5 direct labor-hours per unit * 2100 units	8400	-
Batch processing	$98 per batch * 2 batches	196	-
Order processing	$272 per order * 1 order	272	-
Customer service overhead	$2632 per customer * 1 customer	2632	-
	$216300 + $29400 + $8400 + $196 + $272 + $2632		257200
Customer margin	$296940 - $257200		39740