90.2K

Verified Solution

Link Copied!

Hiram's Lakeside is a popular restaurant located on Lake Washington in Seattle. The restaurant's owner wants to better understand

his costs and hired a student intern to conduct an activity$-$based costing study. The intern identified three activities, completed the

first$-$stage cost allocations and gathered the activity measure data shown below.

The above costs exclude organization$-$sustaining costs such as rent, property taxes, and top$-$management salaries.

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, depend on the number of diners served or the number of drinks served.

Prior to the activity$-$based costing study, the owner knew very little about the restaurant costs. She only knew the total cost for the

month $($including organization$-$sustaining costs$)$ was $$180,000$ and $12,000$ diners had been served. Therefore, the average cost per

diner was $$15.$

Required:

$1$ and $2.$ According to the activity$-$based costing system, what is the total cost and average cost per diner for serving each of the

following parties of diners?

Note: Round your intermediate calculations to $2$ decimal places. Round your Total Cost final answers to $2$ decimal places and

your Average Cost final answers to $3$ decimal places.

Answer & Explanation Solved by verified expert

See Answer