Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Jane s Cookhouse is a popular restaurant located in a scenic setting. The owner of the restaurant has been trying to better understand costs at

Janes Cookhouse is a popular restaurant located in a scenic setting. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an ABC study. The intern, in consultation with the owner, identified three major activities. The intern then completed the first-stage allocations of costs to the activity cost pools, using data from last months operations. The results appear below:
Activity Cost Pool Activity Measure Total Cost Total Activity
Serving a party of diners Number of parties served $ 15,2255,250 parties
Serving a diner Number of diners served $ 102,00012,750 diners
Serving a drink Number of drinks ordered $ 32,55010,500 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.
Prior to the ABC study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month (including organization-sustaining costs) was $204,000 and that 12,750 diners had been served. Therefore, the average cost per diner was $16.
Required:
1. According to the ABC system, what is the total cost of serving each of the following parties of diners?
a. A party of five diners that orders four drinks in total. (Round your answers to 2 decimal places.) Jane's Cookhouse is a popular restaurant located in a scenic setting. The owner of the restaurant has been trying to better understand
costs at the restaurant and has hired a student intern to conduct an ABC study. The intern, in consultation with the owner, identified
three major activities. The intern then completed the first-stage allocations of costs to the activity cost pools, using data from last
month's operations. The results appear below:
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.
Prior to the ABC study, the owner knew very little about the costs of the restaurant. She knew that the total cost for the month
(including organization-sustaining costs) was $204,000 and that 12,750 diners had been served. Therefore, the average cost per diner
was $16.
Required:
According to the ABC system, what is the total cost of serving each of the following parties of diners?
a. A party of five diners that orders four drinks in total. (Round your answers to 2 decimal places.) According to the ABC system, what is the total cost of serving each of the following parties of diners?
a. A party of five diners that orders four drinks in total. (Round your answers to 2 decimal places.)
b. A party of two diners that does not order any drinks. (Round your answers to 2 decimal places. Do not leave any empty spaces;
input a 0 wherever it is required.) c. A lone diner who orders two drinks. (Round your answers to 2 decimal places.)
Convert the total costs you computed in (1) 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 five diners that orders four drinks in total.
b. A party of two diners that does not order any drinks.
c. A lone diner who orders two drinks. (Round your answers to 2 decimal places.)
image text in transcribed

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

Accounting

Authors: Michael J. Jones

2nd Edition

0470017791, 978-0470017791

More Books

Students also viewed these Accounting questions

Question

a. What is the name of the university?

Answered: 1 week ago

Question

Identify and define the eight channels of nonverbal communication

Answered: 1 week ago