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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
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: Activity Cost Pool Serving a party of diners Serving a diner Serving a drink Activity Measure Number of parties served Number of diners served Number of drinks ordered Total Cost $ 18,700 $114,750 $ 39,600 Total Activity 5,500 parties 13,500 diners 11,000 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. 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 $243,000 and that 13,500 diners had been served. Therefore, the average cost per diner was $18. 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 four diners that orders three drinks in total. (Round your answers to 2 decimal places.) Activity Cost Pool ABC Cost Serving parties Serving diners Serving drinks
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