Check Gino's Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been tryling 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: Serving a party of diners Serving a diner Serving drinks Number of parties served Number of diners served 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 whether one person is at a table or the table is full. Other costs, such as washing dishes, depend on the Data concerning these activities are shown below: Berving a Party Berving a DinlServing Drina otal Total cost Total activity $120,000 $42,000 $61,600 44, 000 6,000 parties 20,000 diners desnks 8223,600 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 $223,600 and that 20,000 diners had been served. Therefore, the average cost per diner was $11.18 ($223,600+ 20,000 diners $11.18 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. 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? 3. Convert the tohal cosyo omued in part 2, above to costs per diner In other words what s he average cost per diner for Check r Data concerning these activities are shown below: Serving a Party Serving a Diner Serving DrinksTotal $42,000 Total cost Total activity $120,000 $61,600 223, 600 6,000 parties 20,000 diners 44,000 drinks Pri ior 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 $223,600 and that 20,000 diners had been served. Therefore, the average cost per diner was $11.18 ($223,600 + 20,000 diners $11.18 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
