2. BBQ Bangladesh is a popular restaurant located on Dhaka. 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. She 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 Activity Measure Total Cost Total Activity Serving a party of diners ... . Number of parties served $12,000 5,000 parties Serving a diner Number of diners served $90,000 12,000 diners Serving a drink Number of drinks ordered $26,000 10,000 drinks Required: 1. Estimate the activity rate of each cost pool 2 According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? a. A party of four diners who order three drinks in total. b. A party of two diners who do not order any drinks. c. A lone diner who orders two drinks.

2. BBQ Bangladesh is a popular restaurant located on Dhaka. 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. She 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 Activity Measure Total Cost Total Activity Serving a party of diners ... . Number of parties served $12,000 5,000 parties Serving a diner Number of diners served $90,000 12,000 diners Serving a drink Number of drinks ordered $26,000 10,000 drinks Required: 1. Estimate the activity rate of each cost pool 2 According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? a. A party of four diners who order three drinks in total. b. A party of two diners who do not order any drinks. c. A lone diner who orders two drinks.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 39P: Randy Harris, controller, has been given the charge to implement an advanced cost management system....

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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. Activity Cost Pool Serving a party of diners Serving a diner Serving drinks Activity Measure Number of parties served Number of diners served Number of drinks ordered Total Cost $ 18,290 $ 112,840 $ 33,990 Total Activity 5,900 parties 12,400 diners 10,300 drinks 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…