Stan's Cookhouse is a popular restaurant located in the center of Birmingham. 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 three major activities. He 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		12,000	12,000	parties
Serving a diner	Number of diners served		95,000	17,000	diners
Serving a drink	Number of drinks ordered		34,000	7,000	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 activity-based costing study, the owner knew very little about the costs of the restaurant. He knew that the total cost for the month (including organization-sustaining costs) was 189,000 and that 15,000 diners had been served. Therefore, the average cost per diner was 12.60.

Required:

1.	According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? (Round your intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.)

(a) The total cost of serving of a party of four diners ho order three drinks in total is?_________

(b) The total cost of serving of a party of two diners who do not order drinks is?____________

(c) The total cost of serving of a lone diner ho orders two drinks is?__________

2.	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? (Round your intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.)

(a) The average cost per diner for serving of a party of four diners who order three drinks in total is?____diner

(b) The average cost per diner for serving of a party of two diners who do not order any drinks is?______diner

(c) The average cost per diner for serving of a lone diner who orders two drinks is?_____diner

3.

Which of the following are the reasons for that the average cost per diner under ABC differs from the overall average cost of 12.60 per diner? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

(a) The 12.60 per diner figure does not recognize that there are some economies f scale in serving larger parties.

(b) The 12.60 per diner figure does not recognize that there are some diners order more drinks than others.

(c) The average cost of 12.60 per diner includes organization-sustaining costs that are excluded from the computations in the activity-based costing system.

(d) The activity-based costing system recognizes all of the differences in diners' demands on resources