Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ginos Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been trying to better understand costs at the restaurant and

Ginos 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 Activity Measure
Serving a party of diners Number of parties served
Serving a diner Number of diners served
Serving drinks 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.

Serving a Party Serving a Dinner Serving Drinks Total
Total cost $65,700 $77,000 $81,000 $223,700
Total activity 9,000 parties 10,000 diners 45,000 drinks

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 $223,700 and that 10,000 diners had been served. Therefore, the average cost per diner was $22.37 ($223,700 10,000 diners = $22.37 per diner).

1. Compute the activity rates for each of the three activities. (Round your answers to 2 decimal places.)

Cost per unit of activity
Serving a Party per party
Serving a Diner per diner
Serving Drinks per drink

Fill in the chart.

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

Step: 3

blur-text-image

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

Contemporary Auditing Real Issues And Cases

Authors: Michael C. Knapp, Loreen Knapp

5th Edition

032418834X, 978-0324188349

More Books

Students also viewed these Accounting questions

Question

Why must in-service training or on-the-job education be continuing?

Answered: 1 week ago