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EXERCISE 7-14 Calculating and Interpreting Activity-Based Costing Data LOT 3, LOT-4 Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The owner
EXERCISE 7-14 Calculating and Interpreting Activity-Based Costing Data LOT 3, LOT-4 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. llocations of costs to the activity cost pools. The results appear below Activity Cost Pool Activity MeasureTotal Cost Total Activity Serving a party of diners Serving a diner Serving drinks Number of parties served Number of diners served Number of drinks ordered $33,000 $138,000 $24,000 6,000 parties 15,000 diners 10,000 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
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