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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
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 activitybased costing study. The intern, in consultation with the owner, identified the following major activities:
Prior to the activitybased costing study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month was $ and that diners had been served. Therefore, the average cost per diner was diners $ per diner
Required:
Compute the activity rates for each of the three activities.
According to the activitybased 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.
Convert the total costs you computed in part 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.
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