Fixed cost allocation. 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 $10,000 per month. The owners of the restaurants need to decide how to divide the $10,000 cost. The actual usage, planned usage, and practical capacity in the month of May was:

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?

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Practical Capacity Parking Spots 2,000 1,500 1,500 Actual Parking Spots Used 1,500 1,400 1,300 Planned Parking Spots 1,600 1,300 1,100 Restaurant