Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
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 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 concerning these activities are shown below. Total cost Total activity Serving a Party $51,000 6,000 parties S erving a Dinner $124.000 20.000 diners Serving Drinks $95.200 56,000 drinks Total $270,200 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 $270,200 and that 20.000 diners had been served. Therefore, the average cost per diner was $13.51 ($270,200 - 20.000 diners = $13.51 per diner) Required: 1. Compute the activity rates for each of the three activities. (Round your answers to 2 decimal places Serving a Party Serving a Diner Serving Drinks Cost per unit of activity per party per diner per drink 2. According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? (Do not round intermediate calculations. Round your final answers to 2 decir places.) 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 party of one diner who orders two drinks Total Party of four diners who order three drinks Party of two diners who order no drinks

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Information Systems

Authors: Jack J. Champlain

2nd Edition

0471281174, 978-0471281177

Students also viewed these Accounting questions