Three restaurants in a downtown area of a large city have decided to share a valet service and parking lot for their customers. The cost of the service and lot is $14,000 per month. The owners of the restaurants need to decide how to divide the $14,000 cost. The actual usage, planned usage, and practical capacity in the month of May was: Actual Parking Planned Parking Practical Capacity Restaurant Spots Used Spots Parking Spots A 1.700 2,100 2,500 B 1,600 1.400 1,700 C 1,400 1.100 1,700 Requirements 1. Allocate the fixed cost to each restaurant using actual, planned, and capacity usage measures. 2. In this situation, which method of allocation makes the most sense? Requirement 1 Before we allocate the fixed costs to each restaurant, let's first determine the basic formula for allocating costs. Fixed cost Proportion of total usage = Allocation per restaurant Now allocate the fixed cost to each restaurant using actual, planned, and capacity usage measures. Calculate each usage measure one at a time. (Round proportions to three decimal places. Round your final answers to the nearest whole dollar.) Restaurant Actual usage Planned usage Practical capacity B Total Requirement 2 In this situation, which method of allocation makes the most sense? The planned would appear to be the most appropriate basis for allocating the $14,000 common cost. This ratio is a stable benchmark and does not fluctuate based on variations in either the actual or practical capacity monthly usage of spots for each of the restaurants, which is not an issue with each of the other two methods