Comm 294 managerial accounting practice lab chapter Levels of cost and decision making

# Comm 294 managerial accounting practice lab chapter Levels of cost and decision making

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1. award: 15 out of 15.00 points Exercise 5-15 Calculating and Interpreting Activity-Based Costing Data [LO2, LO3] 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 activity-based costing 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 Activity Measure Total Cost Total Activity Serving a party of diners Number of parties served \$ 17,985 5,450 parties Serving a diner Number of diners served \$ 112,140 13,350 diners Serving a drink Number of drinks ordered \$ 38,150 10,900 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. She knew that the total cost for the month (including organization-sustaining costs) was \$240,300 and that 13,350 diners had been served. Therefore, the average cost per diner was \$18. Required: 1. According to the activity-based costing system, what is the total cost of serving each of the following parties of diners?

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• Spring '09
• AZIZ
• activity cost pools, Activity Cost Pool

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